AMZN: The $132B Capex Bet That's Working
Amazon spent $131.8 billion on capital expenditure in FY2025. That's more than the GDP of most countries, and it's the number that separates Amazon from every other tech company on earth. The market is starting to reward that spending — AMZN trades at $238, up 44% from its 52-week low of $165, with a $2.56 trillion market cap. The bull case rests on one division: AWS. Andy Jassy's latest shareholder letter sent Jefferies reiterating a Buy with a $300 target, calling out improving visibility on AI growth. AWS generated the majority of Amazon's operating profit while representing roughly a quarter of revenue. The custom Trainium AI chips are sold out. Cloud revenue is accelerating. At 33x trailing earnings, Amazon isn't cheap — but it hasn't been cheap since 2008. The question is whether the AI infrastructure buildout generates the returns to justify the spend, or whether Amazon is building the world's most expensive stranded asset.