Amazon Stock Still a Buy Despite AI Capex Fears, Investor Says

The author of this piece is buying Amazon stock despite its recent downturns due to AI capex fears. The reason for their optimism lies in the company's $496 billion AWS backlog, which is growing triple digits year over year and has most AI capacity contracted for at least five-year terms.

Amazon CEO Andy Jassy stated that AWS is on pace to have double the power capacity by the end of 2027 compared to 2025, with the lion's share of this 2027 capacity already reserved. This means that the contracted demand is driving forward supply.

The author points out three key reasons why they are continuing to buy Amazon stock: AWS is re-accelerating on a very large base, with segment revenue reaching $42.23 billion in Q2 FY26 and growing 37% year over year; Amazon's AI business and chips business each cleared a $25 billion annualized run rate at triple-digit growth; and advertising is becoming one of the best businesses on the internet.

The author also notes that the balance sheet supports Amazon's spending, with debt-to-equity sitting at 0.37 and interest coverage at 35.2 times. They argue that no other hyperscaler name stacks a $496 billion cloud backlog on top of a $70 billion trailing advertising business like Amazon does.

The author acknowledges that capex is real and can be a risk, but points out that the math laid out by Jassy shows that data centers monetize for 30-plus years after initial spend, servers break even in less than three years, and the capacity being built is already contracted.