AWS Drives Amazon's Growth, But Capital Spending Raises Concerns
Amazon's stock performance has been impressive, with a year-to-date gain of 7.38% and a six-month increase of 17.32%, reaching $249.19 pre-market on September 16. Despite this, its near-term chart is fragile.
The company's earnings engine is accelerating, but its investment bill is enormous. Amazon's latest quarter was strong, with EPS reaching $5.75, exceeding expectations of $1.81, and revenue hitting $200.60B, surpassing the expected $196.16B.
AWS growth remains above 20%, and AI infrastructure spending produces strong returns. Advertising continues to grow faster than retail, making it a crucial aspect of Amazon's business mix.
However, capital intensity is a central risk, with planned 2026 capital spending potentially reaching $200B, depressing free cash flow and raising the hurdle for AWS returns.