Amazon to Invest $200 Billion in Data Centers by 2026
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 12 hours ago
0mins
Source: NASDAQ.COM
- Massive Investment Plan: Amazon plans to invest $200 billion in data centers by 2026, aiming to expand its artificial intelligence computing capabilities, although the market's cautious stance on such high spending has led to the stock not maintaining its usual premium valuation.
- Cloud Computing Growth: Amazon's cloud division, AWS, accounted for 59% of its operating profits in Q1 despite only making up 21% of total revenue, showcasing its higher operating margin compared to e-commerce, with AWS growing at a 28% rate, the best performance in nearly four years.
- Capital Expenditure and Growth Relationship: CEO Andy Jassy noted in his shareholder letter that AWS's rapid growth necessitates higher capital expenditures to support future development, indicating that Amazon's investments in cloud computing will drive long-term growth potential.
- Valuation Advantage: Amazon's stock is currently near its lowest level in terms of cash flow from operations over the past two decades, and given its high capital expenditures, now is an opportune time for investors to load up on Amazon shares, especially amid weaker short-term market sentiment.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 244.160
Low
175.00
Averages
280.01
High
325.00
Current: 244.160
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Selling Compute Power: Meta plans to sell excess computing power, similar to other large tech firms like Amazon and SpaceX, a move that could create a new revenue stream to partially offset the high costs of AI development.
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