Seattle, January 6, 2026, 10:03 PST
- Amazon shares rose nearly 4% as investors weighed heavy AI and data center spending against a 2026 payoff story.
- A company filing showed free cash flow fell to $14.8 billion on a trailing 12-month basis as investment outlays surged.
- Commentators are split on whether the spending cycle lifts AWS growth and margins fast enough to satisfy investors.
Amazon.com shares rose nearly 4% on Tuesday as investors again weighed the company’s outsize spending on artificial intelligence and data centers against the promise of faster growth in 2026. Shares were up about 3.7% at $241.67 in late morning trade.
The scrutiny comes as U.S. tech giants pour tens of billions of dollars into the servers, chips and power-hungry facilities needed to train and run new AI models. Investors are pressing for clearer evidence that the spending will translate into sustained profit, not just weaker cash flow.
For Amazon, the stakes are highest at Amazon Web Services, the cloud unit that supplies computing for corporate software and AI, and competes with Microsoft and Alphabet. AWS is a smaller slice of Amazon’s revenue than its online store, but it generates the bulk of its operating profit.
Amazon’s free cash flow — cash left after operating costs and investment spending — fell to $14.8 billion for the trailing 12 months ended Sept. 30, down from $47.7 billion a year earlier, a filing showed. Chief Executive Andy Jassy said “AWS is growing at a pace we haven’t seen since 2022,” as the company pushed to add capacity for AI demand. 1
Amazon Chief Financial Officer Brian Olsavsky said in October he expected full-year capital expenditures, or capex, to be around $125 billion and higher next year, without giving a figure. “The report confirms Amazon’s operations are firing on all cylinders after a year of relative underperformance,” said Ethan Feller, a stock strategist at Zacks Investment Research, after Amazon reported 20% AWS revenue growth and a 24% rise in advertising sales in the third quarter. https://www.reuters.com/business/retail-consumer/amazon-forecasts-quarterly-revenue-largely-below-estimates-2025-10-30/
Much of the spending is aimed at boosting AWS capacity with custom chips such as Trainium, built for training AI systems and for inference — generating results once a model is trained. Amazon said its newest Trainium3-based UltraServers can deliver up to 4.4 times more compute performance than the prior generation, lowering the cost of running AI workloads at scale. 2
A 24/7 Wall St analysis on Tuesday argued that the capex surge fits a familiar Amazon pattern of spending heavily and then letting utilisation catch up, pointing to AWS and advertising as higher-margin engines. It pegged the stock at about 29 times estimated 2026 earnings. https://247wallst.com/investing/2026/01/06/why-amazons-spending-spree-makes-it-a-must-buy-now/ 3
Seeking Alpha contributor Millennial Dividends wrote on Monday that Amazon was fairly valued around $230 a share and forecast annual earnings growth of 15% to 20%, driven in part by automation and lower retail costs. The author projected automation could eliminate 600,000 jobs by 2033 and lift annual cost savings by up to $10 billion. 4
In a Jan. 4 Motley Fool column, analyst Marc Guberti said faster growth in Amazon’s advertising business and renewed AWS momentum left the stock looking undervalued after a muted 2025. He flagged online ads as a margin driver as Amazon tries to close some of the gap with Meta Platforms and Alphabet in digital advertising. 5
