Amazon.com (AMZN) Is Up 10.8% After AI-Driven AWS Growth and Record $125B CapEx Plan—Has The Bull Case Changed?

• Amazon.com recently reported strong third-quarter results, highlighted by a 20.2% year-over-year increase in AWS revenue and significant investments in AI infrastructure, including the announcement of Project Rainier, as well as providing an upbeat outlook for the fourth quarter of 2025.
• A unique insight from these announcements is Amazon's elevated capital expenditure plan to US$125 billion for 2025, reflecting accelerating AI demand and a focus on cloud-driven growth, while implementing major workforce reductions for increased operational efficiency.
• We'll now assess how Amazon's expanded AI infrastructure and robust AWS performance could influence the company's long-term growth narrative.

This technology could replace computers: discover 28 stocks that are working to make quantum computing a reality.

Amazon.com Investment Narrative Recap

To be a shareholder in Amazon.com, you need to believe that its continued dominance in cloud computing, underpinned by AWS and rapid AI adoption, can outpace growing competitive and cost pressures. The recent Verizon AI Connect partnership reinforces AWS’s strength as a near-term catalyst, but it does not materially change the biggest risk: maintaining profitability as AWS faces mounting capital intensity, technological competition, and supply constraints.

Of the recent announcements, the Verizon deal is particularly relevant; it directly addresses the need for enhanced network capacity as AI workloads surge, supporting AWS’s role as a foundational platform for enterprise innovation. This partnership highlights how AWS’s investments in infrastructure are closely tied to its ability to continue capturing value from the AI and cloud transformation themes.

Yet, in contrast to the optimism around AWS, investors should be aware that rising capital expenditures and intensifying competition could...

Read the full narrative on Amazon.com (it's free!)

Amazon.com’s outlook anticipates $905.9 billion in revenue and $111.9 billion in earnings by 2028. This is based on a projected annual revenue growth rate of 10.6%, and an earnings increase of $41.3 billion from current earnings of $70.6 billion.

Uncover how Amazon.com's forecasts yield a $287.57 fair value, a 13% upside to its current price.

Exploring Other Perspectives

142 member forecasts from the Simply Wall St Community for Amazon’s fair value range from US$173.76 to US$296.74. With AWS’s accelerated AI ambitions, these differing views point to both the potential and uncertainty facing Amazon’s future performance.

Explore 142 other fair value estimates on Amazon.com - why the stock might be worth 32% less than the current price!

Build Your Own Amazon.com Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Amazon.com research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Amazon.com research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Amazon.com's overall financial health at a glance.

Looking For Alternative Opportunities?

Opportunities like this don't last. These are today's most promising picks. Check them out now:

• We've found 18 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
• Trump has pledged to "unleash" American oil and gas and these 22 US stocks have developments that are poised to benefit.
• Uncover the next big thing with financially sound penny stocks that balance risk and reward.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com