Amazon's AI-Fueled Growth Trumps Dividend Expectations

Amazon's decision not to pay dividends has been a sticking point for some investors. However, despite its large market cap of $2.7 trillion, Amazon continues to invest heavily in capital expenditures (capex), particularly in artificial intelligence.

The company spent $220 billion on data centers this year, up from $132 billion in 2025. This significant investment has led to high growth rates, with revenue increasing by 18% to $382 billion in the first half of 2026, driven largely by its cloud computing arm, Amazon Web Services (AWS), which accounted for $79 billion of that revenue and increased by 33% over the same period.

Amazon's decision not to pay dividends can also be attributed to tax advantages. Shareholders do not pay taxes on capital gains as long as they don't sell, whereas companies are taxed on capex or share repurchases. By not paying dividends, Amazon can allocate its capital more efficiently and avoid taxation.