Amazon: AI brings Christmas cheer
When one of the most magnificent of the Magnificent 7 announces its results, the world takes notice, particularly when it offers a unique insight into both the mood of the global consumer and the progress of the AI revolution.
Since Amazon is expecting sales for the current quarter, including the holiday season to come, at somewhere between $180bn and $190bn, it seems fair to say that Santa’s going to be having a big night and there should be a tidy haul under the tree.
The market reacted positively to news that Amazon’s operating margins had nudged up to 11%, pushing the share price up 7% on the day and boosting the company’s market capitalisation over $2-trillion. The real fizz came from Amazon’s cloud storage business, where the ravenous demand for data storage from generative AI tools presents the company with what CEO Andy Jassy described as “an unusually large, maybe once in a lifetime opportunity”.
Jassy said Amazon Web Services (AWS) was seeing triple-digit revenue growth, and it is hurling large amounts of capital to develop capacity, estimating that it will invest $75bn this year.
You could have been forgiven for assuming that Amazon’s white-collar employees would have been overjoyed by their great good fortune at being in the epicentre of all this action, but when AWS’s CEO Matt Garman had the temerity to suggest that they might actually turn up at the office five days a week, he got both barrels from employees who suggested this was “dismissing their humanity”. It certainly looks as though the work from home battleground is warming up.
Reaction Engines Reaction Engines: Hypersonic fails to take off
While the ever-busy Elon Musk’s SpaceX has been making extraordinary progress in landing and recycling its rocketry, the doughty old British aerospace operation Reaction Engines appears to have failed to clear the launch pad.
The company emerged from excitement in the 1980s about the potential of HOTOL, or horizontal take-off and landing, which offered the juicy prospect of zipping you at Mach 5 from London to Sydney in four hours, clearly a game-changer in theory though sadly a little tricky to achieve in practice.
When government funding dried up, Alan Bond set up Reaction Engines in 1989 to keep tinkering away at the concept. Despite considerable progress and regular injections of cash from a long list of optimistic investors, it has finally run out of juice and been placed into administration, with 173 of its 208 staff made redundant.
Never shy of an acronym, the company’s SABRE technology encompassed a Synergetic Air Breathing Rocket Engine, and the key to its success was a pre-cooling technology that would dissipate temperatures that would otherwise cause the engine to melt, never an optimal result mid-flight.
The company succeeded in licensing its technology to customers such as Mercedes, which used it in Formula 1 engines, and this year it managed a test of a Rolls-Royce jet engine with its cooling system operating successfully at Mach 3.5. But when it was unable to persuade shareholders to tip in an extra £20m, the game was sadly up.
It seems likely that military applications will be the catalyst to make hypersonic flight a reality, with the US and China pouring money into the field.