Amazon Stock Outlook: Earnings Engine Accelerates Amid Capital Spending Risks
Amazon's (AMZN) stock has been on a tear this year, up 7.38% year-to-date and 17.32% over six months. The e-commerce giant's market capitalization has reached $2.68 trillion as of September 16.
The company's earnings engine is accelerating, but its investment bill is enormous. In the latest quarter, Amazon reported EPS of $5.75, beating expectations of $1.81. Revenue also exceeded forecasts at $200.60 billion.
AWS and advertising remain the economic core of Amazon's business. AWS growth remains above 20%, while AI infrastructure spending produces strong returns. Advertising continues to grow faster than retail.
However, capital intensity is a central risk for Amazon. The company's planned 2026 capital spending could approach $200 billion, depressing free cash flow and raising the hurdle for AWS returns. If AI demand grows slower than expected, depreciation and financing costs could rise before revenue catches up.