Amazon(US:AMZN) The Motley Fool·2026-02-17 04:04Core Viewpoint - Amazon's stock is experiencing a decline due to rising capital expenditures and concerns over an AI bubble, but this dip is viewed by some investors as a generational buying opportunity [1][2]. Financial Performance - Amazon plans to spend $200 billion on capital expenditures this year, significantly higher than the expected $150 billion [4]. - Amazon Web Services (AWS) generated $35.6 billion in revenue during the fourth quarter, marking a 24% year-over-year growth, the highest in 13 quarters [6]. - AWS backlog reached $244 billion, reflecting a 40% year-over-year increase and a 22% rise from the previous quarter [6]. Profitability and Cash Flow - AWS operates with high margins, often achieving operating margins in the mid-30% range, providing robust cash flow for Amazon [7]. - The company's e-commerce division experiences variability in profitability, but AWS's consistent margins offer financial flexibility for reinvestment [7]. Strategic Initiatives - Amazon is enhancing its AI capabilities through partnerships, notably with Anthropic, integrating its Claude model into the AWS ecosystem [9][10]. - The collaboration with Anthropic and the development of custom silicon are part of Amazon's strategy to build a cost-efficient, vertically integrated AI stack [10]. Investment Perspective - The current stock price is seen as heavily discounted relative to Amazon's potential upside, making it an attractive buy for long-term investors [11][13]. - The ongoing software bear market has brought Amazon's stock to its lowest levels during the AI revolution based on price-to-earnings trends [14].