As AI infrastructure giants become government-backed utilities, their investment appeal diminishes like banks after 2008. The next wave of value creation will come from stagnant, existing businesses that adopt AI to unlock new margins, leveraging their established brands and distribution channels rather than building new rails from scratch.

Early tech giants like Google and AWS built monopolies because their potential wasn't widely understood, allowing them to grow without intense competition. In contrast, because everyone knows AI will be massive, the resulting competition and capital influx make it difficult for any single player to establish a monopoly.

Jeff Bezos's new AI startup, Project Prometheus, is focused on engineering and manufacturing for computers, aerospace, and automobiles. This is a strategic move to create vertically integrated AI for industries where he has massive existing investments (AWS, Blue Origin, Rivian), signaling a focus on physical-world applications over competing in the crowded foundation model space.

While custom silicon is important, Amazon's core competitive edge is its flawless execution in building and powering data centers at massive scale. Competitors face delays, making Amazon's reliability and available power a critical asset for power-constrained AI companies.

While most tech giants focus AI on digital information (bits), Amazon leverages it for physical logistics (atoms). This fusion with robotics will massively expand retail margins, yet the market undervalues Amazon, as shown by its historically low P/E ratio, creating a significant investment opportunity.

Amazon has attached a specific, massive financial value to its AI assistant, Rufus. It's projected to generate over $10 billion in new sales annually by increasing conversion rates by 60%, proving the immediate and substantial ROI of embedding AI into the e-commerce customer journey.

Beyond capital, Amazon's deal with OpenAI includes a crucial stipulation: OpenAI must use Amazon's proprietary Trainium AI chips. This forces adoption by a leading AI firm, providing a powerful proof point for Trainium as a viable competitor to Nvidia's market-dominant chips and creating a captive customer for Amazon's hardware.

After being left out of the AI narrative in previous quarters, Amazon's strong earnings were propelled by its cloud and AI business. A key indicator was the 150% quarterly growth of its custom Tranium 2 chip, showing it's effectively competing with other hyperscalers' custom silicon like Google's TPU.

The narrative of a broad AI investment boom is misleading. 60% of the incremental CapEx dollars in the first half of 2025 came from just four firms: Amazon, Meta, Alphabet, and Microsoft. Owning or being underweight these four stocks is a highly specific bet on the capital cycle of AI.