• In recent months, Amazon has accelerated investment in artificial intelligence infrastructure and data centers for Amazon Web Services, which now contributes roughly two-thirds of the group’s operating profits and is growing revenue at its fastest pace in several years.
• These AI-driven cloud and advertising advances are reinforcing Amazon’s position across multiple high-margin business lines, supporting a broader narrative of renewed growth momentum beyond its core retail operations.
• Next, we’ll examine how AWS’s reaccelerating growth and AI-focused capital spending affect Amazon’s existing investment narrative and long-term assumptions.

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Amazon.com Investment Narrative Recap

To own Amazon today, you need to believe that AWS, advertising and the broader Prime ecosystem can compound profits while heavy AI and data center spending earns its keep. Recent news of rising AI-driven capital expenditure and AWS’s 20% revenue growth supports the near term catalyst around cloud and AI adoption, but also sharpens the biggest current risk: sustained margin pressure if AI infrastructure spending outpaces monetization or if cloud competition intensifies.

Among recent announcements, the expectation that Microsoft, Alphabet, Amazon and Meta will lift combined AI-related capital spending to roughly US$440 billion over the next year is especially relevant. It highlights how aggressively Amazon is investing to support AWS’s AI workloads at the same time investors are debating whether the broader AI trade, which has pushed mega cap tech to around 30% of the S&P 500, could be inflating a sector-wide risk.

Yet investors should also weigh how this heavier AI capex cycle could affect AWS margins and returns on investment over time…

Read the full narrative on Amazon.com (it’s free!)

Amazon.com’s narrative projects $905.9 billion revenue and $111.9 billion earnings by 2028. This requires 10.6% yearly revenue growth and a $41.3 billion earnings increase from $70.6 billion today.

Uncover how Amazon.com’s forecasts yield a $295.53 fair value, a 30% upside to its current price.

Exploring Other Perspectives

121 members of the Simply Wall St Community currently see Amazon’s fair value between US$208 and US$450, underlining how far opinions can diverge. Set against this, the ongoing shift of IT spend into cloud and AI that underpins AWS’s appeal is a powerful theme readers may want to compare with those varied views.

Explore 121 other fair value estimates on Amazon.com – why the stock might be worth as much as 99% more than the current price!

Build Your Own Amazon.com Narrative

Disagree with existing narratives? Create your own in under 3 minutes – extraordinary investment returns rarely come from following the herd.

• A great starting point for your Amazon.com research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Amazon.com research report provides a comprehensive fundamental analysis summarized in a single visual – the Snowflake – making it easy to evaluate Amazon.com’s overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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