Amazon delivers a jaw-dropper that changes the AMZN conversation

Amazon (AMZN) did each the close things this quarter. In short, AMZN didn’t endure an net occupation this quarter. But it did person a price-tag problem.

Amazon posted a cleanable triumph successful the net report. A cleanable top-line bushed and its fastest AWS maturation successful 13 quarters is usually origin for celebration. However, surprisingly, the absorption of the markets was incredibly different.

The banal fell arsenic overmuch arsenic 9% connected Friday, Feb. 6, Reuters reported.

Why is that? Well, investors are fixating connected the instrumentality illustration of a $200 billion superior expenditure program for 2026.

Bank of America’s takeaway gets close to the point.

BofA reiterated a bargain standing with a $275 terms target, TheFly reported. Analysts besides said the expenditure was not a amusement of strength, but a indispensable outgo of remaining up successful AI and cloud.

Amazon CEO Andy Jassy’s ain connection was likewise direct.

Once again, Amazon's fourth-quarter show met expectations, declaring the benignant of fundamentals that were required to calm the tape.

• Net sales:$213.4B, up 14% twelvemonth implicit year

• Operating income:$25.0B (or $27.4B, excluding one-time charges)

• Net income:$21.2B, $1.95 per diluted share

• AWS sales:$35.6B, up 24% twelvemonth implicit year

One happening I find noteworthy, aft respective years covering Amazon, is however important AWS is becoming for Amazon.

AWS remains Amazon's breadstuff and butter; AWS operating income was $12.5B successful Q4.

BofA's framing fits with that nett mix. Analysts noted that AWS's maturation exceeded expectations and accelerated from 1 4th to the adjacent arsenic much capableness came online.

Here's the enactment that explains wherefore investors instantly pivoted from “nice quarter” to “prove it.”

• Free currency flow:$11.2B, down from $38.2B a twelvemonth earlier

• Operating currency flow:$139.5B, up 20%

What's absorbing is that Amazon pegs this contented arsenic a forward-looking strategy.

That’s wherefore the $200B capex people is hitting hard. This does not connote that Amazon has accrued spending successful this country for the archetypal time.

Given its size, Amazon's superior expenditure program came arsenic nary surprise. However, the marketplace absorption was owed to 1 important fact: It comes astatine a captious clip successful the AI debate.

The marketplace is presently debating whether hyperscalers are transforming from “asset-light” platforms into capital-heavy operators.

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