Amazon’s stock is approaching a 52-week high, buoyed by CEO Andy Jassy’s recent announcements about the company’s substantial investments in artificial intelligence and custom silicon technology. The market is set to respond to these developments on April 29, when Amazon is expected to report its first-quarter 2026 earnings, a moment that could validate or challenge its ambitious $200 billion capital expenditure plan.
The catalyst for this stock rally arose from Jassy’s annual shareholder letter released on April 9, where he unveiled significant financial metrics for the first time. Notably, the revenue from Amazon Web Services’ (AWS) AI services has reached an annualized run rate exceeding $15 billion. Even more striking is the performance of Amazon’s custom silicon business, which includes Graviton processors and Trainium AI chips; this division is now generating over $20 billion annually and is growing at triple-digit rates. Demand for the Trainium2 chip is so high that it is nearly sold out, while Trainium3, which began shipping in early 2026, is almost fully pre-booked. The expected Trainium4, which is still about 18 months away from general availability, has already attracted significant reservations. According to analysts at Barclays, this internal chip division could be valued at approximately $50 billion should it be sold externally.
Underpinning this technological investment is Amazon’s ambitious plan for capital expenditures. The company has earmarked roughly $200 billion for investment in 2026, which it claims is the largest single-year corporate investment in U.S. history. This aggressive spending strategy has already impacted Amazon’s cash flow, with free cash flow decreasing from $38 billion to $11 billion. However, Jassy has justified this expenditure by referencing massive long-term customer commitments, including a notable contract with OpenAI obligating $100 billion in future AWS spending. He mentioned that other major agreements are either signed or in the advanced stages of negotiation.
Simultaneously, Amazon is broadening its ambitions beyond its traditional e-commerce and cloud services. The company has announced plans to acquire satellite operator Globalstar for approximately $11.6 billion, which will provide critical infrastructure and spectrum licenses. This acquisition is a significant step forward for “Project Kuiper,” Amazon’s low-Earth orbit satellite initiative, positioning the company as a competitor in the satellite internet market and further diversifying its business portfolio.
Despite these positive developments, not all indicators are encouraging. A recent U.S. policy change that eliminated the de minimis rule—previously allowing low-value imports from China to enter duty-free—has introduced cost pressures within Amazon’s third-party marketplace. The company is currently negotiating with suppliers for potential price adjustments. Should the growth rate of retail merchandise volume slow to 4-5%, down from the previous quarter’s 8%, operating leverage in the core commerce segment might take a hit.
Nevertheless, Wall Street remains largely optimistic about Amazon’s prospects. Wells Fargo has raised its price target on the stock to $305, naming it as their top pick in the internet sector. Cantor Fitzgerald has also increased its target to $260, citing rising enterprise adoption of Trainium3. Overall, an impressive 64 out of 68 analysts have rated Amazon’s stock a “buy,” with none recommending a sell. The shares recently closed at €211.05, reflecting a more than 15% increase for the month and only 4% short of the 52-week high of €220.55.
Looking ahead to the April 29 earnings report, Amazon has guided for operating income in the range of $16.5 billion to $21.5 billion for the first quarter. A central focus will be AWS’s revenue growth, which stood at $29.3 billion in the same quarter of the previous year. Maintaining or exceeding a 20% growth rate will be crucial for sustaining confidence in the company’s $200 billion spending strategy. Conversely, a drop below this threshold could invite scrutiny on the ambitious plan.
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