Amazon's Billions: Why Spending Alone Won't Sink the Stock

Amazon is running its largest capital-spending program in history, with an estimated $220 billion in expenditures this year. The spending continues into next year and beyond, with plans to install 2 million Nvidia graphics processing units (GPUs) in Amazon Web Services' infrastructure by 2027 and 2028.

The company's past performance suggests that heavy investment does not necessarily lead to a decline in its stock price. In fact, two of the worst years for Amazon's stock in the past 15 years were also years when the company reported net losses due to heavy spending. Both times, the stock rebounded significantly.

The first instance was in 2014, when Amazon spent $4.9 billion on capital expenditures, a 42% increase from the previous year. Despite sales growth of 20%, operating income shrank to $178 million, and the company reported a net loss of $241 million. However, in 2015, operating income rebounded tenfold, and the stock rose 118%.

The second instance was in 2022, when Amazon spent $58.3 billion on capital expenditures, despite revenue growth of only 9%. The company reported a net loss of $2.7 billion due to a $12.7 billion pre-tax valuation loss on its investment in Rivian Automotive. However, in 2023, the stock rebounded 81% after Amazon posted a net income of $30.4 billion.

Amazon's spending has been significant in recent years, with capital expenditures reaching $55.4 billion, $77.7 billion, and $128.3 billion in 2021, 2024, and 2025, respectively. However, the stock's returns were mixed, rising only 2% and 44% in those years.

The key takeaway from Amazon's history is that spending alone is not a reason to sell its stock. Instead, investors should focus on whether operating income continues to grow while the budget runs. If growth stalls, it may be time to worry.