Amazon ‘s stock performance hasn’t been much to write home about lately. But CEO Andy Jassy’s latest annual letter to shareholders strengthened our resolve to stick with it. The reason: Amazon is putting a ton of shots on goal, and the company’s track record suggests enough of them will find the back of the net, rewarding our patience once the profits start flowing. Wall Street agreed, at least on Thursday, with shares up 4.5%. While encouraging, the rally only brings the stock back to flat year to date. Amazon’s shots are coming from all over, including a massive AI computing expansion, faster and farther online deliveries, robots, and out-of-this-world internet service (literally). Jassy’s letter on Thursday covered them all. But they aren’t cheap — and that’s been a steady overhang on the stock, which has lagged behind the broader market and most of its “Magnificent Seven” peers over the past two years. “I think this [underperformance] is going to change,” Jim Cramer said during Thursday’s Morning Meeting. “It’s one of the best-run companies in the world. One day, it’s going to be up … as much as Alphabet.” Alphabet — the owner of Google, YouTube and robotaxi service Waymo — is another tech giant whose stock had stalled out, only to eventually get its momentum back last year once regulatory overhangs lifted and the strength of its eclectic businesses became too much to ignore, especially the capabilities of artificial intelligence model Gemini. Unfortunately, we pulled the plug too soon last spring and were forced to return to the stock at higher prices in December. It’s a mistake that Jim has said we’re intent to learn from, not just with Amazon but Microsoft , too. For Amazon, investors’ biggest worry right now is its plan to shell out $200 billion in capital expenditures this year, which Wall Street projects will lead to negative free cash flow (FCF) in 2026 to the tune of $11.47 billion, according to FactSet. To be clear, negative FCF means a company is spending more cash than its business is generating in a given period. Last year, Amazon’s free cash flow was still positive at $11.19 billion, down from $38.22 billion in 2024. Most of that capex spending is going toward AI data centers to support its Amazon Web Services cloud business. Jassy made a compelling defense of these spending plans in Thursday’s letter, reiterating that AWS is monetizing new compute capacity as “as fast as it’s installed.” “We’re not investing approximately $200 billion in capex in 2026 on a hunch,” wrote Jassy, who has been CEO since July 2021, taking over for founder Jeff Bezos. “Of the AWS capex we expect to spend in 2026, much of which will be monetized in 2027-2028, we already have customer commitments for a substantial portion of it,” Jassy added. Over the course of its three-decade history, Amazon has made bold bets to transform itself from an online book seller to the sprawling enterprise it is today — home to a global network of highly…
Read More: Andy Jassy makes it clear giving up on Amazon’s stock would be an expensive