Amazon’s AI Spending is Pressuring Free Cash Flow. Is the Stock Still a Buy?

Detailed summary

In the early 2000s, Amazon launched AWS, and this business offered the company another significant revenue stream. In fact, in recent years, it's become the company's profit…

Amazon (NASDAQ:AMZN), as owner of Amazon Web Services (AWS), has become one of the principal players in the AI story. AWS is the world's No. 1 cloud service provider, offering customers a wide range of AI products and services, from chips to large language models. And the non-AI portfolio is also going strong, meaning both the core and AI businesses are pushing revenue to record levels.

In the third quarter, AWS' annual revenue run rate reached $184 billion. This is as its quarterly revenue soared 39% to $46 billion, for the highest growth in almost five years. Amazon as a whole benefited, with total revenue and operating income climbing.

Missed AI's "Act 1"? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

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