The 30,000 Amazon Job cuts are just an early WARNING.

the redhead crossing the Bloomberg

terminal. Reuters reporting that Amazon

plans to cut up to 30,000 corporate

jobs. Those jobs represent nearly 10% of

corporate workers. Those jobs cuts jobs

cuts are set to start on Tuesday. That

again according to Reuters.

>> The irony of these companies cutting

jobs is that it is exactly what the AI

revolution does. the stock actually

falling slightly on that news. But the

opposite should be what happens because

when these companies cut jobs, guess

what happens, folks? Operating margins

go up. That is the biggest risk factor

for artificial intelligence right now.

And there was a great interview that we

went through in the information that

really talks about this

transformation of artificial

intelligence really benefiting the

companies that are AI native style

companies like AI first companies

because they're most capable of

profiting off of artificial intelligence

because right now you have a lot of

people that use AI but they say it's

kind of like giving Joe Blow a race car

and saying go drive it. And so the non

AI first companies will probably profit

the least. But when you have a company

like Amazon, this is a company that's

clearly at the forefront of the

artificial intelligence revolution. And

they recognize that, hey, artificial

intelligence is going to let us cut a

vast majority of low-level work that we

just don't need at the business. So is

it a surprise that corporate staff are

going to get cut, especially more

entry-level positions? No, not at all.

In fact, that's what's happening. across

the board at companies across the entire

country or even across the world and

this is normal. So guess who wins? Is it

people that win on net? No. People don't

win. It's corporations that win.

Corporations end up winning because they

can lay off 10% of their corporate

workforce, let's say. And then what does

that end up doing? It props their

margins. You've already seen this happen

at Amazon. Look at this. Amazon

year-over-year went from an operating

income, so an operating margin of 9.9%

to an operating margin of 11.4%.

Just in the last year, before even this

announcement, they've already reduced

their GNA expenses from over $3 billion

to under $3 billion in a quarter. And

that is likely now to accelerate as they

lay off even more people. Now, who wins?

And this is the big thing about well

frank frankly

this artificial intelligence revolution.

Who wins? The corporations win and that

sucks for people on net. Look at this

particular chart here. This was an

interesting one. So this particular

chart shows here rage against machines

US change in employment 3 or a month

after the release of uh GPT3.5.

And so what you end up finding is that

AI adopting firms and nonAI adopting

firms had no real net change in their

senior employees. So the ones with as

Andrew Carpathy says agency are the ones

that stay. What does he mean when he

talks about agency? What he means is the

people who have the ability to make

decisions to allocate resources. The

people who take the benefits of

encyclopedic or resource artificial

intelligence, the pattern recognition

that we get from the models of AI, those

people who then apply the results of AI,

the senior developers, the executive

staff, the corporations, they benefit

from artificial intelligence. But the

entrylevel workers who don't have

agency, who don't have the ability to

allocate resources, they lose. And so

this Amazon announcement about laying

off 30,000 employees, this should come

as no surprise and it's expected to

continue to happen across our entire

economy. This individual in this

artificial intelligence piece by the

information, they actually talk about

potentially a a third of workers. See,

they say the US's economy has a $15

trillion labor force and suggests that

maybe you could replace in the next 5 to

10 years 1/3 of the labor force with

artificial intelligence. Replacing $5

trillion of the labor force with

artificial intelligence. There's no

question that yes, AI will somewhere

create new jobs, new startups or

whatever. for example, hey, you know, if

house hacks AI, Reinvest AI keeps

booming the way so far our technology

has been booming. I mean, we raised over

we're at almost a half million dollars

raised in 36 hours now since we put out

sort of our reinvest.co artificial

intelligence uh roadmap over here, which

is really cool at reinvest.co.

Obviously, this video is not a

solicitation. Read the offering circular

here, but you can see all of our goals

and milestones. Just go to houseack.com

or reinvest.co. It's the same company

with a different DBA. But yes, startups

are going to hire people. Like as our AI

booms, which I expect it will, we are

going to hire people. But I think on

net, you're going to lose. I mean, we're

not gonna hire 30,000 people like, you

know, Amazon just laid off, right? And

we'll hire like three of those. Like,

how many great startups could you have

uh to pick up those workers? And so this

idea about, oh, but we're going to

create jobs with AI, yes, but very

slowly. So at first you could see this

massive loss of employment from

artificial intelligence that takes

decades to recover.

But in the meantime, who profits?

Big companies. People always wonder

like, oh, who's going to win from

artificial intelligence? It's big

companies. In fact, we also already know

that the cost of developing chips is

going to go down. The cost of buying

chips is going to go down. The cost of

using chips is going to go down. You're

going to see deflation in chips,

deflation in service provider, white

collar job pricing. The benefits of

those are the aggregators of all of

that. Big corporations that now don't

need as many employees on the white

collar side that could benefit most from

cheaper AI chip prices. Like, sure, do

small companies benefit or do you and I

benefit from cheaper AI prices? Sure, I

guess I could use GPT more and maybe it

doesn't cost $200 a month for the pro

version. Maybe it'll cost $99 a month.

Well, whatever, right? Who cares? What

really matters is that at scale, a

company like AI or Amazon can now

utilize AI to blow off 30,000 jobs and

start firing people. Understand what

30,000 jobs is. Okay? 30,000 jobs on a

white collar job. Call it $125,000 a

year. Plus, add in 20% for benefits

work. Actually, probably more than 20%.

add in 20% for workers comp and uh uh

retirement and regular stock comp. Now

add in additional competitive benefits

to work at Amazon. Uh you're probably

looking at another 40% for employee

related costs, perks, vacations, and

otherwise, right? That means per per

30,000 worker, you're probably looking

at $175,000 package. Multiplied by

30,000 people, that works out to

$5 billion. $5.25 billion a year. See,

that's Yeah. $5.2 billion a year. That

money can basically go straight to

Amazon's cash flow. They're they're

still going to provide our our crap

every single day. They're still going to

end up replacing people with symbotic

robots probably in their factories uh

and eventually, you know, maybe humanoid

robots to actually deliver our packages.

That'll all come in the future. We're

still going to get our packages. But

this white collar workforce reduction,

that's kind of the problem that we don't

really think of yet. And who benefits?

I'll tell you exactly where that $5

billion goes. So that $5 billion per

year works out to about $1.2 billion

over here uh in the GNA side, which

basically goes straight to profit,

right? Straight into margin. So where is

that going to show up? It's going to

show up in their cash flow statement,

which they actually put it on top. So

it's going to show up right here.

[snorts]

See, right now they're cash flow neutral

right now. Cash flow equals zero on free

cash flow at Amazon right now because

they're blowing it all on chips. Okay,

that cash flow explodes. Not only

positive again as you lay off white

collar workers, but it also as you stop

buying as many chips, your cash flow

machine is insane at Amazon. Yeah,

you're going through a a capital

intensive investment period right now,

but how lean these companies are

getting. This is this company is

becoming massively lean. I mean,

honestly, it's almost an investment. I

don't own any Amazon, but this is almost

like as I'm describing this, this is

almost becoming an investment thesis to

invest in Amazon. Ironically, the firing

of of white collar workers, which will

be very bad for humans, which I guess in

a circular manner means people will buy

less on Amazon if they can't get new

jobs, right? Which is also then bad for

Amazon. But, uh, for right now, let's

see what that looks like. So, Amazon has

a share price of about, you know, 226

bucks. get some details here. 226 bucks.

We've got EPS of 833

uh for the end of the year. Okay. So,

what we're going to do is we're going to

go 226 divided by 8.33.

That gives me a 27

PE ratio right now on 2025 numbers. Now,

growth of earnings, I'm looking at 10.4

+ 22.7 + 15.6 + 15.4 equals divid 4.

I've got growth of earnings of 16 16%.

Uh Wall Street growth next four years

averaged, right? So if I take 27 divided

by 16, holy smokes, they're trading for

1.68 peg, that's cheap, you know, for

what Amazon is. I mean, they're

basically selling. I mean, they're a

very labor intensive business with their

fulfillment services, but that's a fair

valuation in this economy. That's a fair

price for Amazon. Uh and and frankly,

their EPS growth could be substantially

greater if they do keep laying off HR

related staff or white collar related

staff. Uh so I actually I mean like

really when you put all of this

together, I hate to say it because it's

like so antihuman and like I have major

empathy for like people losing their

jobs. I have major empathy for just the

human condition. Like what is AI going

to do for us? Um, and and I believe and

I I say these things on my channel not

because they're popular. Uh, like I

think a lot of people when they hear me

say things like, "Oh, like like this

whole LLM thing, this isn't that big of

a deal. Like this is really pattern

recognition." You know, really, you

should watch this in full. Okay, I did a

breakdown on this in the Me Kevin app.

Remember, you can get the Me Kevin app

for free. Like this weekend I was

sitting watching AI you know videos and

I'm reading AI books and you know I

break down some of this on the

difference between uh here I mean you

could see on my on the meet Kevin app

patterns of AI pattern fitting the

mental sandbox reinforcement land

learning supervised learning LLM scaling

whatever you you could see all this kind

of stuff uh along with projections and

otherwise in the M Kevin app which is

kind of cool you know you get the app

for free you can also get the daily

wealth in there which is sort of a daily

notification I send out if you want it.

You can enable it or disable it. Uh and

uh you can decide to get that if you

want. I think it's a cool little

newsletter we do daily. See, if you

actually go to the app, you could go to

the little hamburger menu at the top and

then pick, oh, I don't want the daily

wealth reports or I do or I want Kevin's

alpha reports, but that's for course

members. Sale ends Wednesday, by the

way, for that. But anyway, uh you know,

I I do worry

dramatically that we're going to have

over the next 5 years this dramatic

decline in labor in the labor force.

It's going to really suck. Like we're

going to have a renter nation.

Basically, people aren't going to own

real estate. You will own nothing and be

happy, right? And I think the people who

will get the most screwed are going to

be people who are really heavily

leveraged. So, you have a lot of margin

debt, personal lines of credit, SoFi

personal loans, buy now pay later,

you're living the least lifestyle, you

have high expenses. Uh, and then what

ends up happening is you lose your job

and you're like, well, this sucks, you

know, and you lose your job and then

you're like, crap, I can't get another

job. And, you know, that's where

eventually you get this like slow bleed

economy that really just hurts people

before we actually get the generation

of, you know, the new wave of of jobs.

It could be decades, frankly. So, this

revolution we're going through in the

labor market. It doesn't have to be we

lose jobs now, we get jobs tomorrow. It

could be we bleed jobs for the next 5

years and we get jobs in 15 to 20 years.

And so, if if you're not mentally

prepared for how are you going to be

different? How are you going to be the

allocation of resources agent versus

just the person who's replaced because

your knowledge job is replaced? You

know, if you're not thinking about that,

then you're thinking about AI wrong.

Like if you're thinking I'm going to

wake up every morning and have AI

summarize my life and tell me what to

do, you're going to get replaced. And

this is what I say regularly. Like like

somebody left a a video or a comment. Uh

I'll I'll I'll share this because I

thought it was very interesting. I

replied to this on X and I thought it

was very very valuable. So, I did a

40minute video breakdown on, you know,

the the aircraft

and uh somebody here writes, "Love the

AI summary on a 45minute video, lol."

And like I gave what I thought are

millions of dollars of life lessons,

right? So, I wrote, "Wow." My response

was, "Wow, the loss of context is

insane. Imagine someone giving millions

of dollars worth of perspective for free

to be boiled down into a oneliner that

loses context completely. It will create

a two-tier division in learners, right?

This two tier division in learners

because you're going to have people that

like there are going to be people who

watch this video and go, "Wow, I learned

a lot if I ever want to be a pilot. I

learned a lot if I want tax benefits. I

learned a lot. If I ever want to own an

asset like an aircraft, I I learned a

lot about, you know, different aspects

of life, right? And so, they're going to

be the people who learn and then avoid

making very expensive mistakes or take

advice from this and go, "Wow, I can

make really good decisions because of

the advice in this." And then there are

going to be other people who do an AI

summary and be like, forget about it.

That's the other thing that happens with

AI summaries. You forget. Remember an AI

summary is basically skimming an article

and then it doesn't embed into your

brain like when I read a book like I'm

reading this machine learning and

finance right and I go to

even just this right here this book is

written for advanced graduate students

in academics and financial economic

econometrics

management science and applied science

statistics in addition to quants and

data scientists in the field of quantum

uh quantit ative finance, bro. I could

barely even read the sentence because

it's so high level. Like, and I'm not

saying like I'm at these high levels.

Like, I I try my best to read this and

and there's there's a lot of work

involved in this. Uh and and I enjoy

what I'm reading. Uh especially since

this is an older book and learning

about, you know, gajing processes or

whatever. Like, I love this kind of

stuff, but uh it's hard. But it's like

if we don't challenge ourselves to that

kind of stuff, we're just going to get

replaced. Uh and so you know you skim AI

everything you're going to get replaced.

So it's sort of like a war like this

Amazon layoff is really a warning to

everyone to wake up. And I think really

if we look at you know this this AI

interview here in the information this

is called

uh Venod talks AI power struggle blah

blah blah blah. Uh most enterprises who

are executing AI are doing it with their

people who are not qualified to execute

it. Well, the non-qualified people,

those are the people who are going to

get fired.

Uh, and so you will see these I mean,

they talk a little bit about increasing

margins at AI companies. Basically, they

make this argument like there's so much

profit in artificial intelligence that

like don't worry about AI margins.

There's so much money that even if

prices come down, companies will still

be able to make AI margins. This is

really true, by the way. Like, you know,

if you're at a 90% margin on AI, who

cares if you go down to a 50% margin?

it's still really good. So there's so

much that's the benefit of companies

with huge pricing power with huge PP

because there's so much money you can

make.

You know, you look at like uh Six Flags

for example, we were doing a deep dive

fundamental analysis on this. You know,

they have like an eight or 9% margin.

There's no room for you to cut prices

because you have no margin. You have no

pee. You have small pee pee. Uh, so you

know, here if you're paying $100 to $300

an hour and your cost is $1 to $3, you

have massive room to cut prices.

Exactly. But that all cuts into labor,

too. You know, like the attorney today

who could do so much more work because

they could hire so much more staff. It's

kind of impressive. The question is how

much work is there for that person? Uh,

so it's uh it's it's kind of a weird

time. We'll put it that way. But I think

this uh Amazon layoff is a little bit of

a warning. And so it's not that it's,

you know, a fraction of their 1.5

million people that work there. You what

is that 2% or whatever. It's that it's

like 10 to 15% of their corporate

workforce fired because of AI. And

that's the corporate workforce. They're

the ones who get the stock comp. So it's

actually less dilutive to Amazon stock,

right? Because usually it's the

corporate workers that get the stock

comp, not the fulfillment drivers,

right? So you're paying less out in

stock comp. Kind of scary. Kind of kind

of crazy. Uh so uh argument is not that

you shouldn't use AI summaries. The

argument is when you use AI summaries,

you are much more likely to forget what

you read. So sometimes what I'll do is

I'll read a book or read a passage. I'll

I'll read a whole thing and then

afterwards I'll do an AI summary, right?

And then I'll compare. I rarely do this.

Rarely, but sometimes I'll do. uh like

we can even do it right now on uh on

this u you know interview here summarize

okay so we'll do it together here so key

points enterprise AI struggles are

largely due to in-house staff lacking

qualifications to execute AI projects

margins for AI projects are expected to

improve both algorithmic in efficiency

and cheaper hardware will drive cost

reductions pricing for AI inputs will

rise uh when people derive greater value

circular financing is not inherently

alarming right and he makes the analogy

regarding GM, right? Uh, okay. So, like

that's great, but if I just read that

quick little summary, I might forget all

of it. But see, now if I put my context

hat on, what do I remember? Or like what

do I think of if somebody asked me about

this article? Well, I think about his

reference to which is from the actual

context of the interview because this

was an interview. Hey, is Nvidia

financing OpenAI deals bad? Well, he

gives a really good point. He says,

'Well, it's kind of like GM financing

their cars, isn't it? Their customer is

able to buy more car or more chips

because of financing. And I'm like,

well, I can't really dispute that.

That's actually a really good point and

I appreciate that. And so now I remember

that that log that codes into my brain

neural net more. I already forgot the AI

summary because I remember that context

way more than the scenario. Uh, circular

financing, not a big deal. That context

ingrains in my head this idea about

in-house staff lacking qualifications

that doesn't I didn't really get

anything out of that article regarding

this right but what I did help me was

thinking about Karpathy's post here

about agency it's the decision makers

who utilize AI who benefit from AI ah I

could see that okay so then I try to put

myself in those shoes so if two years

ago I had to hide hire two or three

people to help me go through, you know,

earnings calls to find really specific

niche things. I can now use AI to give

me a head start, then I can personally

go look through it. And I've basically

now replaced the human pre-ressearcher

with AI. Then I can go read it myself

and get my own context. But now I'm

spending my time reading where it's

potentially going to be most valuable

rather than, you know, going on a goose

chase, right? So uh

those sort of contexts I think get lost

substantially when we just use summarize

tools. So it's I I think it's how you

deploy it, right? If you uh summarize to

find where you want to spend your time

and then you get your context, that's

probably good. If you get your context

and then summarize to help you remember

some of the points or see if you missed

anything, that's probably good. If

you're only going around summarizing

everything and hoping that AI agents are

going to run your life for you, probably

gonna lose.

>> Why not advertise these [music] things

that you told us here? I feel like

nobody else knows about this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations, man. You have done so

much. People love you. People look up to

you.

>> Kevin Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your [music] take.