Investors are ’misunderstanding’ Amazon’s CapEx opportunity: analyst

Investing.com -- Amazon delivered strength across cloud, advertising and retail in the fourth quarter, but investors are misreading the company’s heavy capital expenditure as a negative rather than a long-term growth catalyst, according to BMO Capital analyst Brian Pitz.

BMO reiterated its Outperform rating, kept Amazon as a Top Pick, and raised its price target to $310 per share in a note on Friday, saying investors are “misunderstanding CapEx opportunity.”

Pitz described Amazon’s fourth-quarter performance as a “standout quarter,” pointing to a “400bps sequential acceleration in AWS growth to +24%, the fastest growth since 3Q22 and 2pts above Street.”

He said Amazon’s advertising segment also performed well, growing 22% year over year, excluding currency, supported by new partnerships with Roku and Netflix and integrations with Spotify and SiriusXM.

AWS momentum is broad-based, Pitz wrote, driven by “strong momentum in both AI and core non-AI workloads.”

He highlighted Amazon’s Graviton and Trainium chip businesses, which now exceed a $10 billion annual revenue run rate and are growing at triple-digit rates.

He also emphasised Amazon’s rapid infrastructure expansion, noting the company “added 1.2GW of capacity in 4Q25” and plans to double capacity again by 2027, creating a “fourfold increase in capacity since 2022.”

While Amazon’s plan to spend $200 billion in CapEx has spooked some investors, Pitz argued the market is overlooking the long-term benefits, saying BMO “applaud[s] AMZN (and peers) for leaning in on AI-related CapEx.”

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