Making Cents Sense

Amazon’s cloud division prints profits. Its retail machine prints shipping labels by the billion. If I had to choose which one will drive the next chapter of shareholder value, the answer looks obvious—until I examine what the two businesses actually do for each other. Whenever I look at Amazon, I feel as though I am analyzing three companies wearing one trench coat. There is the retailer that sells everything from televisions to emergency quantities of paper towels. There is the marketplace and logistics empire that lets third-party merchants borrow Amazon’s traffic, warehouses, delivery network, and increasingly large collection of fees. Then there is Amazon Web Services, the cloud-computing business that quietly became the financial adult in the room while the retail operation continued buying vans, building fulfillment centers, and promising to deliver dental floss before I remember ordering it. The standard investor answer to “AWS or retail?” is AWS. Of course it is. AWS grows fas...

I like companies with important customers. I become considerably less relaxed when two of those customers account for nearly half the business. That is the strange position I find myself in whenever I look at Arista Networks. The company has become one of the most important suppliers of high-performance networking equipment for hyperscale data centers and artificial-intelligence infrastructure. Its technology sits in the digital engine rooms of some of the richest and most technically demanding companies on Earth. That sounds wonderful because it is wonderful. It is also the problem. According to Arista’s 2025 annual filing, two customers individually accounted for 26% and 16% of annual sales. Together, those two relationships represented 42% of the company’s revenue. The customers were widely identified as Microsoft and Meta, two technology giants spending aggressively to expand cloud and AI infrastructure. If I were trying to invent the perfect customer list for a networking company,...

I have reached the stage of the artificial-intelligence investment cycle where merely hearing the letters “AI” no longer causes me to throw money at a stock as though valuation were an outdated social convention. That does not mean I think the AI infrastructure boom is imaginary. The capital spending is real. The data centers are real. The demand for faster networking is real. The enormous checks being written by hyperscale cloud companies are painfully real—particularly for anyone who thought free cash flow would eventually be used for something quaint, such as dividends. Arista Networks is also a very real beneficiary. The company sells the high-speed networking equipment and software that allow massive computing systems to communicate. If graphics processors are the engines of an AI data center, networking is the road system connecting them. It does not matter how impressive the engines are if traffic jams leave them idling while an executive explains that the cluster is “experienci...

When most people picture Apple, they still picture hardware. They see the iPhone in someone’s hand, a MacBook glowing in a coffee shop, an Apple Watch counting steps its owner absolutely intends to take, or a pair of AirPods that will eventually disappear into the same mysterious dimension that collects unmatched socks. I understand why. Apple is one of the greatest hardware companies ever built. Its devices are visible, desirable, expensive, and constantly discussed. An iPhone launch can dominate the technology news cycle before the phone has even reached a store. Services are different. Nobody lines up outside an Apple Store at midnight to celebrate the arrival of another month of iCloud storage. There are no cinematic unboxing videos for an Apple Music renewal. I have yet to see anyone hold an AppleCare plan above their head while a crowd applauds. Yet the quieter side of Apple is becoming one of the most important parts of the entire company. Behind the annual product events and po...