Amazon's AI Spending Sparks Growth Despite Negative Cash Flow

Amazon's heavy investment in AI infrastructure is driving growth despite negative free cash flow due to its capital expenditures. The company's AWS revenue grew 37% year-over-year, and its AI and chip businesses each surpassed $25 billion in annual revenue.

The AI-powered features like Alexa are creating new consumer demand by introducing products customers didn't previously know about, potentially transforming Amazon's retail model. This shift suggests that Amazon's AI investments may generate significant future returns by expanding what customers buy, beyond just supporting cloud services.

Amazon's stock dropped over 9% recently but is forecasted to rebound to a new all-time high within 12 months, with a price target raised to $355 from $315. This optimism is driven by strong retail growth and AI-driven expansion.