Bernstein’s Mark Shmulik has penned an open letter to executives at the Jeff Bezos–founded firm, saying that although his outlook on the brand is positive there is work to be done on its long-term strategy.

Shmulik points out that although Amazon is enjoying its shares being up 50% in the year to date, it’s still underperforming by approximately 52% when compared with its peers.

The analyst framed his criticism of the $1.24 trillion business by outlining that he was “clearly optimistic about the road ahead,” adding the asset management firm has upgraded Amazon to its best investment idea in the internet category.

However, Jassy’s scattershot approach to development has drawn criticism from investors and spectators alike.

In Jassy’s letter to shareholders released earlier this year, the CEO outlined plans not only for its traditional e-commerce business but also for advertising, health care, media and entertainment, artificial intelligence, and satellite systems to name a few.

As well as its investment strategy, Shmulik—with the backing of Amazon investors—has also criticized some of the organization’s communications.

He said that a simple course of “self-help” could not only remedy investor concerns but also propel the brand into a stock range of $180 to $200.

Shmulik said Jassy and Amazon’s S-team—what the business calls its leadership—need to go back to “day one” thinking, a phrase repeated by Bezos, which symbolizes a startup mindset of vitality and agility.

In Jassy’s shareholder letter for the past year, he did highlight that the company was asking itself about the “conviction” of its experiments, adding: “We took a deep look across the company, business by business, invention by invention, and asked ourselves whether we had conviction about each initiative’s long-term potential to drive enough revenue, operating income, free cash flow, and return on invested capital.”

“Post-last earnings call, I felt my role was less of an analyst and more of a therapist.”

Bernstein’s Mark Shmulik says $AMZN can take steps in “self-help” to re-focus capital and cut losses with @davidfaber and @SaraEisen. pic.twitter.com/4FBg90VvP2

— Squawk on the Street (@SquawkStreet) June 7, 2023

Amazon ‘pursuing too many ideas’

In Shmulik’s view, projects like Amazon Care are taking valuable attention away from projects which will materially strengthen the brand.

He said the company is “simply pursuing too many ideas, with weaker ideas taking away the oxygen, capital, and most importantly focus from the truly disruptive initiatives that ‘only Amazon can do.’”

To make initiatives like health care and broadband—known as Project Kuiper—a reality, the business must “divest, seek outside funding, or trim spend,” he added.

He continued: “Amazon has been trying for half a decade to build ‘something’ in health care, but the goalposts keep moving,” he wrote. Meanwhile, “Kuiper has no discernible competitive advantages over operating competitors.”

Health care isn’t a pipe dream introduced by Jassy—the business has been toying with the market since 2017 when Bezos was still at the helm.

Six years ago the business invested in a tech-driven lab touted to be a cloud-based telehealth service.

In 2018 the business—alongside JPMorgan Chase and Berkshire Hathaway—formed Haven, a low-cost and high-quality health care venture—a project it later abandoned.

Amazon has continued to invest in online pharmacies and health care providers before launching Amazon Care in 2020.

Good money after bad

Shmulik’s criticism of Amazon’s plans didn’t stop there, adding the company needs to reassess its geographies and experimental new stores.

On expanding into new markets, the analyst says that regions like Brazil, India, and Singapore are a case of throwing “good money after bad.”

He said in a highly competitive marketplace Amazon is “underwater” and that despite holding huge potential as a customer base, its market share is declining.

Instead of “tinkering” with physical stores, Jassy needs to “make a call on physical groceries” the letter adds.

The brand has yo-yoed between opening physical shops and then closing them down again—announcing in a few years it was not only shutting a handful of grocery stores but also all of its bookstores and pop-ups.

Instead of trying to push its own brand, the business should “purchase a proven concept such as potential divested KR/ACI stores,” referring to the stores Kroger and Albertsons are selling off as part of their planned merger.

Communication is key

The letter also suggested Amazon needs to take a leaf out of the book of Big Tech competitors like Google and Meta, which break out noncore areas in earnings calls and company communications.

The result, Shmulik said, would “show a far healthier and more profitable core business.”

The analyst added investors want more consistency with metrics on earnings calls, as well as sharper prepared remarks to answer key investor questions before opening up the floor.

“With all due respect, this management’s team hasn’t yet earned investors’ benefit of the doubt. We’re grateful to have Andy Jassy now joining the earnings calls, but after six quarters post CEO appointment there’s still room to tighten the messaging, particularly around strategy and progress,” he wrote.

Clarity is also needed on Amazon’s aims with A.I., Shmulik added: “We get investor questions today asking, ‘Is AWS in last place in A.I.?’ ‘Is retail actually a profitable business?‘ and even ‘Do we want Andy on the earnings call?’ It points to one underlying issue: Amazon doesn’t own its own narrative.”

In Jassy’s shareholder letter, he confirmed the company is developing its own large language models—deep learning algorithms trained on troves of data to predict and generate words or images based on an input—to enhance Amazon Web Services (AWS), a pay-as-you-go cloud computing platform where companies pick and choose the services they want. 

Where to focus

There were a number of areas that Shmulik wanted Amazon to focus on: media and its Buy With Prime service—which allows Prime members to shop at participating online stores with membership benefits.

“Amazon clearly has a competitive advantage, particularly with Shopify throwing in the towel on a competing service, and falls in the category of something only Amazon can do. Allocate more resources here,” Shmulik bluntly put it.

Amazon had no comment when approached by Fortune.