Another balance sheet that I have been waiting for with great curiosity has arrived, Amazon. As you know, Amazon is one of the seven major technology companies in America and I think it is the company that gives the most clues about the American economy. Because on the one hand, Amazon is a technology company, we see how it is going in the cloud services sector, how artificial intelligence is going. On the other hand, Amazon is a retailer. So what is happening on the retail side. How is the American economy going, it has sales not only in America but also in Europe. So we have a lot of information about how the general course of the European economy is, how consumers behave. In this context, Amazon has a very important balance sheet, they brought a good balance sheet. We will look at the numbers a little bit. The stock market does not like balance sheets very much these days. The same thing happened to Amazon. But such losses can be compensated later. For example, the stock market did not like Uber either. I liked the balance sheet very much, I thought there was no problem with that. Later, Uber rose by 8. In other words, we should not take these movements after the balance sheet too seriously.

So what's on the balance sheet, let's look at the numbers first. Amazon's turnover this quarter was $187.8 billion. I know it's a bit hard to wrap our minds around this number, this is just the turnover in 3 months and there's a 10% increase compared to last year. Amazon is now a very big company, it's getting harder and harder for a very big company to grow. But they did it again. The most striking thing is the increase in operating income. There's a 61% increase in operating income compared to the same quarter last year. They have $21.2 billion in operating income. This is the highest figure in their history. This shows me that Amazon is doing important things on the efficiency side. I'll talk about the technological developments a little later. They seem to be taking important steps in using both artificial intelligence and robots effectively, which is reflected in the profit here.

Annual free cash flow was $36.2 billion in all of 2024. When we say free cash flow, we mean all the money they earn and collect from customers. The costs of all the products it sells, all personnel expenses, all investment expenses, you deduct all these and it leaves 36.2 billion dollars in cash. Truly incredible numbers, Amazon is a monster in this context. When we look at its performance in terms of segments, while revenues increased by 10% in North America, there is only a 9% growth in the international arena, excluding the foreign exchange effect. When you add the foreign exchange effect, the growth decreases even more. The foreign exchange effect means the US dollar, as you know, it is a bit too high. It was even higher in the fourth quarter, which is where this balance sheet belongs. It was pushing 109, and of course that has a negative impact. Because when you convert sales made abroad to US dollars, you need to convert them at a high exchange rate. In that context, the increase there is actually 8%, but when you exclude the foreign exchange effect, it is 9%. The unpleasantness of the European market is a bit in question here. Things seem to be a bit slower in Europe. Amazon's home is still the strongest place for it.

The side I am eagerly waiting for is Amazon Web Services, namely Amazon cloud services. It met its targets there, there is a 19% increase. It reached a turnover of 28.8 billion dollars year-on-year. But later, in the statements made by the CEO, this could have been higher. We didn't have enough chips, there was no power. As you know, electricity is very important in operating these data centers, we couldn't solve them, he said. Otherwise, we could have achieved better turnover, we couldn't meet some of the demand, this was his statement. Amazon has another rapidly growing segment, advertising revenues. Just like social media companies, it has also focused on advertising. It has increased its revenues there by around 18%, it has reached 17.3 billion dollars. This is a segment that I really like. Because its marginal cost is almost zero, customers come and look at your website anyway. You show them ads while they are searching for products there. You also earn extra income from this. This was another piece of good news.

There is a 190 basis point increase in the operating profit margin in North America. When we look at the international side, there is a 400 basis point increase. So, what we need to conclude from what I have said so far is this: Amazon continues to grow healthily. It has done tremendous work in terms of operating profit. Its free cash flow is also at such a level that it can support all of Amazon's future projects. Retail sales are still very important for Amazon. They are making very serious technology investments in this context. They are trying many things such as robotics and automation, especially their own robots, their own delivery robots, drones, and on the other hand, they are trying to strengthen the automation in their warehouses and distribution centers. In this way, they both increase their efficiency and improve their delivery speed. This is very important for Amazon, but the main issue that the market is interested in is Amazon Web Services. There is a 19% growth here. As I mentioned earlier, they have reached a turnover of 28.8 billion dollars. There is a 1.3 billion dollar increase compared to the last quarter. In other words, this is the second biggest increase in just one quarter. Things look good there too.

On the other hand, operating margins on the web service side remained strong but did not increase much. The increase in additional sales was not much higher than Wall Street expectations, it was close to expectations. Amazon puts the main reason for this as supply constraints. It says that we could not reach the necessary supply on the chip side, of course, it basically reaches Nvidia chips and talks about other data center solutions. It says that our power infrastructure is not sufficient. On the one hand, I am also an investor on the energy side in America. I am quite active especially in areas such as nuclear. Because we know that these data centers will consume more and more power. Amazon says that these problems will ease a little more in the second half of 2025. This aspect was pleasing, but there is serious competition on the web services side. Microsoft Azure and Google are growing very fast.

On the other hand, on the competition side, Microsoft Azure and Google's growth is slightly above Amazon's. But don't forget that their cloud service business is smaller. It is easier to grow small things. Of course, Amazon Web Service is trying to respond to the competition from them like Bedrock models by developing its own chips on the one hand, Tranium chips, and its own software solutions on the other hand. There are also many new agreements with Paypal, Metronic, and the US military. These also offer additional growth potential in the medium term. In the meantime, he said that we will continue to buy Nvidia chips, they are an integral part of our data center. People sometimes get confused here, I mean, if Amazon develops its own chips. Why does it also go and give so much money to Nvidia? Because their tasks, roles, learning tasks, inference tasks are different. Usually, many different chips can be used in these types of data centers. In other words, there is good news for Nvidia investors. In fact, all the big technology companies that have announced their balance sheets so far, which we call Hyper Scalers, have said that they will invest more in data centers and expand the infrastructure.

When we look at Amazon in terms of infrastructure expenses, it made a capital expense of 26.3 billion in the fourth quarter. He says that this will increase even more and expects CapEx to be high. In other words, there is still demand for artificial intelligence chips. I have always claimed that the fake figures put forward by DeepSeek are not real anyway. Of course, not everything is so bright for Amazon, it also experienced a negative impact of nearly $900 million in the fourth quarter due to the exchange rate difference on its revenues. This is much more than expected, the expected was around $200 million. This is bad and if the dollar remains high in America, this situation, this deterioration will continue. Fortunately, the dollar has relaxed a little in recent days. Both the interest rates on 10-years have relaxed and right now Trump and the minister who manages the treasury are focused on lowering the price of oil. Because they say that if we lower the price of oil, we can lower inflation. In that case, the interest burden on 10-years will decrease. It looks like a reasonable strategy, we will continue to follow it of course, but maybe it can reduce the exchange rate risk a little this way. Therefore, it is possible that Amazon will be slightly less affected by the exchange rate risk in the second quarter. If Trump and the treasury minister's plan also works, this will become even more positive in the third and fourth quarters.

The AI ​​competition is always hanging over companies like Amazon like the sword of Damocles. Everyone is wondering who will win this AI game. Frankly, I see Amazon and Meta as having a great advantage in this regard. Because they are not just trying to sell AI as a service and make money. They are directly making their own operations more efficient. There is a very serious increase in Meta's advertising revenues because it shows the right ads to the right people. One of the main reasons behind the serious increase in operating profits that you just read about in Amazon is that it uses artificial intelligence and automation robots better.

So why did the stock fall? The company is called "sandbagging" a little bit about its future income, in other words, it said a number that was a little below its expectations. In other words, I think it was also below its own expectations. It said that it expects around 7% growth in operating profit. It said that it expects around 6% growth in turnover year-on-year in the next quarter. Of course, this is not something that Wall Street likes. A high-value company like Amazon should always hit at least 10%. I don't know what's behind this, I mean they think the economy in America will get worse. I don't think so, I don't see any deterioration in America right now in the first quarter. The employment data came out again, it doesn't seem like there's any problem. Here, I think the administration is looking at it a little bit more in that context, let's start the new year with a modest goal so that Wall Street doesn't upset us later. Because, as you know, Wall Street raises expectations, then even if those expectations are met, they beat the stock. I think Amazon said let's keep the expectations a little lower this time based on this.

As a result of all this, my opinion about Amazon is of course not investment advice, but if you're going to invest in technology companies in America, it's very important for Amazon to be included in it. Because Amazon is like a serious call option in every field for the future, in other words, it's like an option that things will go well. Let's think about it, they exist in artificial intelligence, they exist in robots, they exist in cloud services, they manage to increase their own retail sales, they increase their advertising revenues. In other words, they exist in every field, and there is also a tremendous free cash flow that will support all this growth. That's why I want to stay in Amazon. But of course, my expectation from Amazon stock is not 11-12 times in 2 years like we did in Palantir. Amazon is already a big and valuable company. But if you are in the technology movement, you need to stay here. If these exchange rate movements reverse in the next quarter, we will see a better balance sheet.

I think that we will start to see the results of Amazon's investments in artificial intelligence and robots, especially in the second half of the year, and I believe that we will see a company that becomes more profitable and increases its turnover in a more practical and effective way. That's why I am maintaining my position in Amazon. The latest balance sheet also gave me the necessary clues to maintain this position. He said that my investment thesis was correct, but of course my term is long, the money I allocate to Amazon is not very important money for my life. If you are thinking in a shorter term, if you need shorter term earnings, or if you think that you can invest the money you will invest in Amazon in a higher yielding place, I think Amazon may not go very far in the short term. Here, it is necessary to keep the term a little longer. Because it is such a giant company, I think it will take some time to regain growth and adjust the power of artificial intelligence.

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