Amazon & Google's World Domination

October 27, 2017

Amazon, Google, Microsoft, and Intel all posted better than expected earnings on Thursday. Phil Bak, CEO of ACSI Funds, joins Cheddar to break down some of those results.

Amazon CEO Jeff Bezos attributed the company's strong numbers to Alexa and its voice-activated products. Bak says it's a testament to the retailing giant's amazing customer satisfaction. It's the thesis on which Jeff Bezos has built this company...and it's working. People are obsessed.

Additionally, Whole Foods generated $21 million of operating income for Amazon this quarter, but Bak is still waiting to see what the company has planned for that acquisition.

And Amazon Web Services continues to be a high revenue driver, but what's the biggest downfall? The risk growth may not outpace declining margins.

Plus, Google continues to rely on its advertising business. Alphabet reported a rise in traffic acquisition costs rose to $5.5 billion. Bak says it's not Google selling to advertisers, it's advertisers selling to users, and if those users are going to glance over ads, it's going to be a big problem for Google. He talks about the struggle Google has had with converting ads to a mobile format.

And when it comes to Google's YouTube Red, Bak believes it has cord-cutters on its side. He does think Google needs to cut prices for YouTube Red in order to increase subscriber growth.