| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
RGA describes Q1 2026 as Year Zero for their research process, fundamentally reorienting around AI tools like Claude Code. The manager emphasizes that AI changes the surface area of what they can monitor, test, and revisit, allowing them to track more companies and inputs without diluting attention quality. They have built dozens of proprietary projects and skills, including a comprehensive SaaS Risk Tracker that helped them purchase two companies since quarter-end while avoiding value traps. The manager is increasingly enthusiastic about AWS as a beneficiary of where AI workflows are heading, focusing on profit pools and platforms rather than infrastructure picks and shovels. They believe the market is misplacing focus on companies seeing a surge in AI infrastructure sales, when capex will inevitably level off causing growth to evaporate and margins to compress at suppliers. AWS is uniquely positioned to benefit from the shift toward token efficiency and model-agnostic orchestration at scale, with growth accelerating as companies move beyond experimenting with AI to running workflows built by AI. The manager sees meaningful dispersion and opportunities for disciplined active management.
RGA is rebuilding its investment research process around AI tools, particularly Claude Code, to expand the surface area of what can be monitored without diluting attention quality, while focusing on profit pools and platforms built on AI rather than infrastructure suppliers, with AWS positioned as a key beneficiary of the shift toward token-efficient, model-agnostic orchestration at scale.
The manager expects AWS growth to accelerate throughout the year as companies move beyond experimenting with AI to running workflows built by AI, though the market has yet to recognize this reality. They believe this is an environment where disciplined active management matters, with meaningful dispersion and the ability to separate durable fundamentals from temporary enthusiasm remaining critical. The manager is excited about the opportunities in front of them.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jun 10 2026 | 2026 Q1 | AMZN, GOOGL | AI, AWS, Cloud, Research Process, SaaS, software, technology | AMZN | RGA rebuilt its research process around AI tools in Q1 2026, expanding monitoring capacity without diluting attention quality. The manager is increasingly bullish on AWS as a beneficiary of AI workflow adoption, focusing on profit pools and platforms rather than infrastructure suppliers. They built a SaaS Risk Tracker that identified two new purchases while helping avoid value traps, and see meaningful opportunities in disciplined active management amid market dispersion. |
| Dec 9 2025 | 2025 Q3 | AAPL, AXP, COF, DFS, GOOGL, MA, NVDA, PLTR, V | AI, Banking, Concentration, healthcare, Networks, payments, Search, technology | - | Historic market concentration in mega-caps creates opportunities for active managers. Google evolved from AI threat to dominant integrated leader following regulatory clarity. Capital One's Discover acquisition transforms it into a major payments player with $1B+ synergies. Healthcare remains mispriced. Current environment rewards disciplined active management over passive approaches. |
| Aug 7 2025 | 2025 Q2 | AVGO, AWE.L, CRSP, FEVR.L, MTN, PTON, PYPL, ROKU, WDAY | Biotechnology, conviction, Enterprise Software, Fitness, Streaming, Trade Policy, volatility |
CRSP PTON WDAY ROKU FEVR PYPL AWE MTN |
RGAIA actively deployed capital during Q2 2025 volatility, adding three new positions in gene therapy leader CRISPR, fitness platform Peloton, and enterprise software provider Workday. Portfolio balances value and growth with asymmetric opportunities trading at attractive valuations. Life sciences momentum emerging while maintaining disciplined focus on businesses with durable advantages and strong balance sheets. |
| May 27 2025 | 2025 Q1 | AMZN, BRKR, DHR, ENTG, GOOGL, IAC, LULU, META, NKE, NVDA, TMO, TSM | AI, Athleisure, Biotechnology, Life Science, semiconductors, Taiwan, Trade Policy, uncertainty |
TSM BRKR LULU |
RGA capitalized on Q1 2025's historic policy uncertainty to invest in enduring themes: AI infrastructure through TSMC, life science innovation via Bruker, and global brand expansion with Lululemon. The firm's conviction-driven approach during market volatility reflects focus on businesses with competitive moats and secular growth drivers that persist regardless of short-term chaos. |
| Jan 27 2025 | 2024 Q4 | AMZN, AVGO, COST, DBX, DEO, GEV, NVDA, PLTR, TSLA, UBER, VST, WMT | AI, large cap, market breadth, rates, technology, valuation | - | RGA added Amazon, Diageo, and Uber at compelling valuations while market concentration reached Dot-Com levels. Amazon offers 4.5% free cash flow yield with e-commerce essentially free, Diageo trades at crisis-era multiples as growth reaccelerates, and Uber generates massive cash flow despite autonomous vehicle fears. Market imbalances create opportunity. |
| Sep 16 2024 | 2024 Q2 | MTN, PLAY | Biotechnology, consumer, Entertainment, large cap, small caps, value |
PLAY MTN |
RGA added Dave & Busters and Vail Resorts at attractive valuations despite consumer headwinds, viewing both as high-quality assets with compelling long-term prospects. The fund maintains biotech exposure through Sartorius while positioning for consumer normalization as rate cuts and lower oil prices provide relief to discretionary spending patterns. |
| May 23 2025 | 2024 Q1 | DHR, META, MRVI, MXCT, SRT3.DE | Biotechnology, Life Sciences, Portfolio Management, small caps, valuation |
META MRVI SRT3.DE |
RGA trimmed their large Meta position to fund substantial increases in life sciences small caps Maravai and Sartorius. Both companies offer exceptional margins and growth potential in mRNA technology and bioprocessing. The managers remain enthusiastic about small caps despite recent underperformance, positioning for clinical trial advancement and bioprocessing recovery over the next 2-3 years. |
| May 23 2024 | 2023 Q4 | META, MRVI, MXCT, SRT3.DE | Bioprocessing, Biotechnology, Life Sciences, mRNA, Portfolio Management, small caps, value |
ADI|BDX|FI|FND|HAS|META|MSFT|MSI|ORCL|TMO SRT3.DE |
RGA trimmed Meta to fund substantial increases in life sciences positions, particularly Maravai LifeSciences and new position Sartorius AG. Both companies offer critical bioprocessing infrastructure with exceptional margins and growth potential as mRNA therapies advance to clinical trials in 2025-2026. The fund maintains focus on small caps and life sciences with increasingly nimble position management. |
| May 25 2023 | 2023 Q1 | CTKB | Banking, Biotechnology, growth, small caps, value | - | Small caps offer exceptional value after five years of underperformance, with Russell 2000 generating zero returns while large caps soared. RGA built positions in quality names like Cytek Biosciences, a flow cytometry leader trading below intrinsic value despite technological advantages and strong fundamentals. Banking sector stress creates opportunities for selective small cap investors. |
| Jan 25 2023 | 2022 Q4 | AZO, FEVR LN, GOOG, MTCH, PYPL | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIThe manager describes Q1 2026 as Year Zero for their research process, rebuilding tools with and around Claude Code. AI has fundamentally changed the surface area of what they can monitor, test, and revisit, allowing them to track more companies and inputs without diluting attention quality. They emphasize AI as a force multiplier for human thought, not a replacement, and have built proprietary workflows integrating multiple LLMs for different tasks. |
Claude Code LLMs Workflow Automation Research Process Token Efficiency |
CloudThe manager is increasingly enthusiastic about AWS as a beneficiary of where AI workflows are heading, focusing on profit pools and platforms built on AI rather than infrastructure picks and shovels. AWS is uniquely positioned to benefit from a shift toward token efficiency and model-agnostic orchestration at scale. Amazon Bedrock can run multiple leading AI models, and AWS scale and cost per unit advantages position them to win as AI workflows mature. |
AWS Amazon Bedrock Model Orchestration Trainium Infrastructure | |
SaaSThe manager built a comprehensive SaaS Risk Tracker to identify software companies relatively inoculated from AI risk. The tracker combines quantitative and qualitative factors to score AI displacement risk, analyzes free cash flow quality, and mines transcripts for AI-related commentary. Since quarter-end, they purchased two companies where this tracker helped understand relevant risks, and it has prevented them from acting on other watchlist names. |
AI Risk Free Cash Flow Software Displacement Resilience | |
SemiconductorsThe manager believes the market is misplacing focus on companies seeing a surge in sales as hyperscalers build AI infrastructure. When capex inevitably levels off, growth will evaporate and margins will compress at suppliers, particularly Tier 2 suppliers. Companies building recurring revenues receive little attention amidst the hype, but these revenues compound at high incremental margins and will generate soaring free cash flow as growth slows. |
Hyperscalers Capex Infrastructure Nvidia Trainium | |
| 2025 Q3 |
AIAI is dominating market performance and sucking the air out of everything else. Google has evolved from facing an AI threat to becoming a dominant AI player with vertical integration advantages across semiconductors, hardware, models, consumer, and enterprise. The company's proprietary TPU chips and integration of AI into search positions it as a low-cost provider in the AI ecosystem. |
Artificial Intelligence Machine Learning Search TPU Gemini |
PaymentsCapital One's acquisition of Discover transforms it from a card issuer to a vertically integrated payments entity. The deal provides network ownership that allows COF to avoid Durbin Amendment constraints on debit interchange fees, potentially generating over $1 billion in network synergies by 2027. This positions COF as a major domestic payments player with American Express-like economics. |
Network Effects Interchange Debit Cards Financial Services | |
Market ConcentrationThe S&P 500 is experiencing historic concentration with the top 10 companies accounting for over 40% of the index weight. This creates performance challenges for active strategies and makes historical P/E comparisons less relevant. The equal-weighted S&P 500 provides a more accurate proxy for median stock performance than the cap-weighted index. |
Index Concentration Mega Cap Active Management Market Structure | |
| 2025 Q2 |
Gene TherapyCRISPR Therapeutics represents a first-mover advantage in cell and gene therapy with commercial approval of Casgevy. The company trades at a significant discount with strong cash position and pipeline optionality. Management has balanced capital discipline with R&D ambition, positioning the company to lean into its pipeline while competitors retrench. |
CRISPR Casgevy FDA Pipeline Cash |
FitnessPeloton has evolved into a cash-generative recurring revenue business with opportunities in strength training and nutrition expansion. The company can cut its way to success with improved marketing efficiency and potential for modest pricing power. Digital fitness platform with cult-like following and trusted instructor relationships. |
Digital Subscription Strength Nutrition Pricing | |
Enterprise SoftwareWorkday offers mission-critical HR software to Fortune 500 companies with expanding finance functions. New CEO Carl Eschenbach focuses on margin improvement and operational streamlining. Double-digit revenue growth with potential for significant earnings acceleration as margins expand. |
SaaS HR Finance Margins Fortune | |
StreamingRoku has increased device and household share covering over half of US households but faced ARPU challenges. Company abandoned walled garden strategy and opened to programmatic advertising, sharing data for better economics. Platform revenue growth accelerating with commitment to GAAP operating profit in 2026. |
CTV ARPU Advertising Programmatic Platform | |
| 2025 Q1 |
AIAI's march forward is relentless with strong value in companies enabling AI infrastructure buildout, particularly hardware. This momentum is insulated from macro and policy noise making it a true constant. Capital is flowing into this ecosystem at unprecedented speed with focus on firms having pricing power, mission-critical positioning, and scale to benefit from accelerating AI workloads globally. |
Infrastructure Hardware Workloads Datacenter Chips |
BiotechnologyLife Science is contending with severe COVID hangover compounded by concerns around NIH funding, FDA staffing, and drug pricing under Trump's policies. Despite this, the foundational importance remains unshaken as no sector is as mission-critical to life itself as healthcare. The sector stands to benefit enormously from AI through protein structure breakthroughs and next-gen CRISPR targeting. |
Healthcare NIH FDA Drug Pricing CRISPR | |
SemiconductorsTSMC demonstrates resilience in a challenged semiconductor landscape where AI segment flourishes while broader chip markets endure one of the worst recessions in industry history. The industry bifurcation creates opportunity as non-AI markets are near cyclical lows, positioning for recovery while AI datacenter buildouts continue unabated. |
Cyclical Foundries Advanced Nodes Datacenter Manufacturing | |
Trade PolicyTrump-era policy constants include uncertainty, change, and transactional lens applied to nearly every decision. Markets braced for global tariff regime with unclear scope and implementation. Economic Policy Uncertainty reached historic highs, weighing heavily on markets through March and culminating in worst 3-day stretch since 1987 crash. |
Tariffs Uncertainty Negotiations Policy Volatility | |
AthleisureLululemon maintains relevance despite increased competition from upstarts like Vuori, Alo and Fabletics who have won share with faster fashion and cheaper prices, predominantly from Nike. Lulu's core performance segment remains unquestioned with demonstrable quality advantage in proprietary fabrics, while expanding geographically to China and Europe. |
Competition Fashion Performance China Expansion | |
| 2024 Q4 |
AIAI enthusiasm drove significant gains in 2024, with AI names like Nvidia, Broadcom, and Palantir among the top performers. AI fueled gains extended to companies like Vistra Corp and GE Vernova on expectations that datacenter investments will require acceleration of power supply development. AWS is investing aggressively to adapt its infrastructure from CPU-optimized to GPU-dominant for AI demands. |
Data Centers Semiconductors Cloud Infrastructure |
E-commerceAmazon's e-commerce segment invested aggressively in fulfillment center capacity during COVID ahead of demand, consuming cash-generating potential but creating the most defensible business in the world. The timing of waning e-commerce investment intensity coinciding with AWS's need for further CAPEX investment is remarkably fortuitous for Amazon. Amazon's e-commerce segment is arguably the most moated business in the world. |
Logistics Fulfillment Marketplaces | |
AlcoholCOVID was a bonanza for spirits companies, but the aftermath proved challenging with over-inventoried retail channels and tough comparables. Diageo serves as the bellwether for the spirits industry, facing narratives about GLP-1 drugs, Gen Z drinking less, and economic struggles in emerging markets. Tequila remains the one spirit category driving growth for the entire industry, with Diageo having the greatest exposure among large spirits companies. |
Beverages Tequila Spirits | |
Autonomous VehiclesHype surrounding fully autonomous vehicles became pervasive, with the narrative taking on a life of its own in markets. AVs are currently operational only in specific climates and geographies under certain conditions, making it nearly impossible to replace large-scale networks of human drivers. Uber's stock reflects draconian assumptions about AV disruption, despite the company being uniquely positioned to manage AV capacity alongside demand peaks and troughs. |
Electric Vehicles Technology Disruption | |
| 2024 Q2 |
EntertainmentThe fund initiated a position in Dave & Busters, viewing it as an affordable entertainment option for families despite near-term weakness from low-income consumer retrenchment. They also repurchased Vail Resorts, seeing value in irreplaceable ski mountain assets at decade-low valuations. |
Entertainment Consumer Leisure Family |
ConsumerConsumer-facing companies have been under pressure due to macro headwinds affecting low-income consumers, driven by high inflation and aggressive monetary tightening. The managers see relief coming from lower oil prices and forthcoming rate cuts that should benefit discretionary spending. |
Consumer Discretionary Inflation Rates Spending | |
BiotechnologyThe fund continues to hold Sartorius despite management communication issues and challenging guidance. They believe the bioprocessing industry has established a post-COVID bottom with an inflection point beginning, maintaining confidence in structural growth despite debate over recovery timing. |
Biotechnology Bioprocessing Recovery Growth | |
| 2024 Q1 |
BiotechnologyThe fund significantly increased positions in life sciences companies including Maravai LifeSciences and Sartorius AG. Maravai offers critical mRNA capabilities through TriLink and quality control through Cygnus, with exceptional margins and growth potential as mRNA therapies advance to clinical trials. The biotech sector represents a key focus area with multiple investments across the value chain. |
mRNA Bioprocessing Quality Control Clinical Trials Vaccines |
Small CapsThe managers emphasized their enthusiasm for small caps and made strategic moves to sell large cap positions like Meta to fund smaller-cap life science investments. They view the current environment as favorable for small cap opportunities despite recent underperformance relative to large caps. |
Small Cap Positioning Opportunity Valuation Allocation | |
| 2023 Q4 |
BiotechnologyThe fund significantly increased positions in life sciences companies including Maravai LifeSciences and initiated a position in Sartorius AG. Maravai offers critical mRNA manufacturing capabilities through TriLink and quality control testing through Cygnus, with exceptional margins and growth potential as mRNA therapies advance to clinical trials. The fund sees substantial opportunity in bioprocessing infrastructure as the industry scales. |
mRNA Bioprocessing Quality Control Clinical Trials Manufacturing |
Life Science ToolsThe fund emphasized investments in companies providing essential tools and services to the biotech industry. Sartorius dominates single-use bioreactors and offers comprehensive bioprocessing solutions with superior customer relationships. These companies benefit from the growing demand for biologics manufacturing and the shift from traditional steel bioreactors to single-use systems. |
Bioreactors Single-use Manufacturing Bioprocessing Equipment | |
| 2023 Q1 |
Small CapsSmall caps have dramatically underperformed large caps, with the Russell 2000 generating no return for five years while sitting at 2018 levels. The institutionalization of investment and indexation has led to fewer dollars in small cap space, creating opportunities for selective investors. |
Russell 2000 Underperformance Indexation Institutionalization |
BiotechnologyCytek Biosciences represents a leader in full spectrum flow cytometry, a transformative technology for cell analysis used across pharmaceutical, biotech, and research institutions. The company offers superior technology at lower costs than traditional competitors. |
Flow Cytometry Life Science Tools Research Instruments | |
Credit StressRegional bank failures including Silicon Valley Bank and First Republic highlighted fragility in the banking system, driven by concentrated deposit bases and interest rate risk from held-to-maturity portfolios. These failures demonstrated herding behaviors around emerging risks. |
Regional Banks Bank Failures Interest Rate Risk |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jun 10, 2026 | Fund Letters | RGA Investment Advisors | AMZN | Amazon.com, Inc. | Internet Retail | Internet & Direct Marketing Retail | Bull | NASDAQ | AI platform, Amazon Bedrock, AWS, cloud infrastructure, custom chips, Enterprise Migration, Equity, high-margin, hyperscaler, Model Orchestration, recurring revenue, Token Efficiency, Trainium | Login |
| Aug 7, 2025 | Fund Letters | Jason Gilbert | MTN | Vail Resorts Inc. | Consumer Discretionary | Hotels, Restaurants & Leisure | Bear | New York Stock Exchange | Brand, Leisure, Pricing, Travel, turnaround | Login |
| Aug 7, 2025 | Fund Letters | Jason Gilbert | CRSP | CRISPR Therapeutics AG | Health Care | Biotechnology | Bull | NASDAQ | Asymmetric, Biotech, cash-rich, Gene Editing, pipeline | Login |
| Aug 7, 2025 | Fund Letters | Jason Gilbert | PTON | Peloton Interactive Inc. | Consumer Discretionary | Leisure Facilities | Bull | NASDAQ | Connected-Fitness, Margins, Pricing power, Subscription, turnaround | Login |
| Aug 7, 2025 | Fund Letters | Jason Gilbert | WDAY | Workday Inc. | Information Technology | Application Software | Bull | NASDAQ | Enterprise software, HCM, Margins, SaaS, valuation | Login |
| Aug 7, 2025 | Fund Letters | Jason Gilbert | ROKU | Roku Inc. | Communication Services | Advertising-Based Video on Demand | Bull | NASDAQ | advertising, ARPU, CTV, platform, Programmatic | Login |
| Aug 7, 2025 | Fund Letters | Jason Gilbert | FEVR | Fevertree Drinks Plc | Consumer Staples | Beverages | Bull | New York Stock Exchange | Beverages, Brand, consumer staples, margin expansion, Partnerships | Login |
| Aug 7, 2025 | Fund Letters | Jason Gilbert | PYPL | PayPal Holdings Inc. | Information Technology | Transaction & Payment Processing Services | Bear | NASDAQ | digital payments, Fintech, Moat-Erosion, Security | Login |
| Aug 7, 2025 | Fund Letters | Jason Gilbert | AWE | Alphawave Semi | Information Technology | Semiconductor Design | Bull | New York Stock Exchange | Governance, IP-Cores, M&A, semiconductors, Volatility | Login |
| May 27, 2025 | Fund Letters | RGA Investment Advisors | TSM | Taiwan Semiconductor Manufacturing Company Limited | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NYSE | advanced nodes, AI infrastructure, Cyclical Recovery, Foundry, geopolitical risk, hyperscalers, NVIDIA, Pricing power, semiconductors, Taiwan | Login |
| May 27, 2025 | Fund Letters | RGA Investment Advisors | BRKR | Bruker Corporation | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Academic Research, duopoly, insider buying, Life Sciences Tools, margin expansion, Mass Spectrometry, NMR Spectroscopy, Pan-Omics, recurring revenue, Spatial Biology | Login |
| May 27, 2025 | Fund Letters | RGA Investment Advisors | LULU | Lululemon Athletica Inc. | Consumer Discretionary | Textiles, Apparel & Luxury Goods | Bull | NASDAQ | athleisure, Brand, China, competitive moat, fashion, international expansion, Men's Growth, Performance Apparel, Proprietary Fabrics, share repurchases | Login |
| Sep 16, 2024 | Fund Letters | RGA Investment Advisors | MTN | Vail Resorts Inc | Consumer Discretionary | Hotels, Resorts & Cruise Lines | Bull | NYSE | defensive, dividend yield, Epic Pass, Geographic Diversification, Irreplaceable Assets, Pricing power, Recreational Activities, Scarcity Value, seasonal business, share repurchases, Ski Resorts, subscription model, Tourism, Value | Login |
| Sep 16, 2024 | Fund Letters | RGA Investment Advisors | PLAY | Dave & Buster's Entertainment Inc | Consumer Discretionary | Restaurants | Bull | NASDAQ | Consumer Discretionary, digital marketing, Eatertainment, EBITDA multiple, entertainment, Family Entertainment, food and beverage, Management Change, Pricing power, Restaurants, share repurchases, Special Events, turnaround, Value | Login |
| May 23, 2024 | Fund Letters | RGA Investment Advisors | MRVI | Maravai LifeSciences Holdings Inc | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Biotech, cancer treatment, CDMO, gene therapy, growth, high margins, Life Sciences Tools, mRNA Technology, small-cap | Login |
| May 23, 2024 | Fund Letters | RGA Investment Advisors | SRT3.DE | Sartorius AG | Health Care | Life Sciences Tools & Services | Bull | XETRA | Bioprocessing, cell therapy, European, gene therapy, Life Sciences Tools, market share gains, Pure-Play, Single-use Bioreactors | Login |
| May 23, 2024 | Fund Letters | RGA Investment Advisors | META | Meta Platforms Inc | Communication Services | Interactive Media & Services | Bull | NASDAQ | digital advertising, growth, large-cap, Metaverse, social media, technology, virtual reality | Login |
| May 23, 2024 | Fund Letters | RGA Investment Advisors | SRT3.DE | Sartorius AG | Health Care | Life Sciences Tools & Services | Bull | XETRA | Bioprocessing, Bioreactors, cell therapy, Europe, gene therapy, Life Sciences Tools, market share gains, Pure-Play, Single-Use, Value | Login |
| May 23, 2024 | Fund Letters | RGA Investment Advisors | ADI|BDX|FI|FND|HAS|META|MSFT|MSI|ORCL|TMO | Meta Platforms Inc | Communication Services | Interactive Media & Services | Bull | NASDAQ | digital advertising, growth, large-cap, Metaverse, operating leverage, social media, technology, virtual reality | Login |
| TICKER | COMMENTARY |
|---|---|
| AMZN | In our Q3 commentary, we featured Google (Alphabet) as an AI stock. We remain convicted in Google's positioning, but our work has made us increasingly enthusiastic about AWS, Amazon's cloud infrastructure segment, as a beneficiary of where AI workflows are heading. In that spirit, our obsession is far more about the profit pools and platforms built on and leveraging AI than with the picks and shovels required to build out AI infrastructure. In that very same commentary we featured Google, we gave a brief shout-out to Amazon's opportunity to thrive in building the application layer of AI by deploying smart orchestration across the retail business' robotics and logistics layers. The orchestration opportunity will take time to play out, but meanwhile, we see AWS at a critical inflection point today. As discussed above, using the right model for the right task matters, and Amazon is uniquely positioned to benefit from a shift toward token efficiency and workflows built by AI but executed largely through non-AI processes. This has become increasingly clear in our own work and there is growing evidence that the most advanced companies deploying AI are moving this way themselves: durable value should accrue to platforms that can orchestrate models, data, compute, storage, security, and workflow execution at scale. Said differently, Amazon's ability to remain model agnostic, while serving the lowest cost tokens, positions them uniquely to capitalize on AI adoption at scale. AWS has been the platform that helped launch countless software, ecommerce and digital service companies and has empowered numerous older companies to migrate their digital infrastructure to the cloud. They have done this with a combination of driving down the cost of compute, leveraging their proprietary chips and building an ecosystem of integrations around their offering. Amazon was an early partner to Anthropic and owns a considerable equity stake in the company and more recently became an owner in OpenAI with an equity stake alongside a commitment from OpenAI to spend $138 billion to consume approximately 2 gigawatts of Trainium capacity through AWS infrastructure. Trainium is AWS' custom AI chip, designed to compete with Nvidia's GPUs at an industry-leading total cost of ownership. As CEO Andy Jassy explained, Our Trainium2 chip has about 30% better price performance than comparable GPUs and is largely sold out. Trainium3, which just started shipping at the start of 2026 and is 30% to 40% more price performance than Trainium2, is nearly fully subscribed. And much of Trainium4, which is still about 18 months from broad availability, has already been reserved. At the heart of AWS' AI offering is Amazon Bedrock. This is a hosted environment that can run many of the leading AI models and agents, as well as many of the open-source cost efficient ones. In a world where leading users of AI require a variety of models, alongside the ability to run non-AI programs, AWS is positioned to win because their scale is greater and their cost per unit (whether we're talking tokens, CPU or memory) is lower than anyone else's. Notably, Amazon is already seeing clear signs that the flywheel between AI workflows and core cloud infrastructure is starting to take hold and accelerate, as explained by Jassy: And then at the same time, we're seeing very significant growth in our core business. And some of that are the migrations that have picked up from enterprises from on-premises to the cloud. But a lot of that is also as AI growth is exploding, it turns out that it leads to a lot of core growth as well, all the post-training, all the reinforcement learning, all the agentic actions and tool usage that these agents are using. And it fits with what you're asking about on the chip side, which is because we have an unusual collection of chips, we have the leading CPU chip in Graviton, and we have the leading price performance silicon AI chip in Trainium. It means that we're really unusually well positioned for the inflection that we're seeing and the type of growth that we're experiencing. This growth is only just beginning and will accelerate as people move beyond experimenting with AI to running workflows built by AI, but the market has yet to recognize this reality. The opportunity in Amazon today feels similar to Google at this time last year. Due to AWS' industry-leading scale during the rise of AI, growth rates are slower than other hyperscaler cloud peers; however, the absolute dollar volume of growth is incredible and accelerating today. This acceleration will continue throughout the year. |
| GOOGL | In our Q3 commentary, we featured Google (Alphabet) as an AI stock. We remain convicted in Google's positioning, but our work has made us increasingly enthusiastic about AWS, Amazon's cloud infrastructure segment, as a beneficiary of where AI workflows are heading. The opportunity in Amazon today feels similar to Google at this time last year. |
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