Jassy's Defense
Since Andy Jassy became CEO of Amazon on July 5, 2021, the stock has not only noticeably lagged broader benchmarks such as S&P 500 and Nasdaq 100 but also underperformed every single big tech companies in Mag7 (Nvidia not shown in the chart since it transforms the Y-axis a bit too much…so you get the idea!)
Such sustained underperformance understandably provides a plenty of ammunition to pontificate at the leadership, especially when you are not the founder of the company. Jassy certainly received more than his fair share of criticism over the last five years. Yesterday, he penned a thoughtful shareholder letter to explain why he believes Amazon’s current position is misunderstood by investors.
Being misunderstood is hardly a new phenomenon in Amazon’s history as Jassy poignantly pointed out even as late as 2014 (The “AWS IPO” happened in 2015), not all of the internal Senior leadership was entirely convinced why they want to be in the cloud business:
At our 2014 AWS operating plan review, the discussion started with a senior leader at the company musing, “Tell me again why we’re doing this business?”
Jassy basically took the time to explain in his letter why Amazon is making somewhat currently confusing bets today which can deliver exceptional returns in the future. Take their investments in rural delivery network, for example. Following Amazon’s investments in rural areas, average number of monthly same-day customers doubled in 2025 and by the time Amazon’s expansion in rural areas is complete, Amazon will deliver over a billion more packages each year. For a long time, rural areas were considered almost uneconomic for e-commerce players and hence, these areas continued to be dominated by physical retailers, especially Dollar General. Given Amazon’s commitment to rural areas, it’s hard not to worry a bit about companies such as Dollar General’s ability to compound revenue over the long-term.
Behind the paywall, I would like to share some thoughts on three of Amazon’s key current bets: Amazon LEO, Amazon’s investments related to drone delivery, and of course, the massive capex spree on AWS.
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Let’s start with the Amazon LEO bet. Jassy wrote in his letter (emphasis mine):