Amazon AI spending surge puts focus on cloud returns

Amazon forecast a sharp rise in capital spending tied largely to AI infrastructure, and shares moved lower after the company's capex outlook exceeded analysts' expectations.

Amazon announced a forecast for a substantial rise in capital spending, with much of the increase linked to artificial intelligence infrastructure. The company’s capex outlook was reported as US$200 billion and about US$50 billion higher than analysts had expected. That guidance coincided with downward pressure on the share price and renewed market discussion about the pace at which AI investments translate into returns. BNN Bloomberg interviewed Lloyd Walmsley of Mizuho Americas about AWS momentum and how Amazon compares with other cloud providers. Key reported points: - The article reports Amazon plans roughly US$200 billion in spending, with the capex forecast about US$50 billion above analysts' expectations. - Shares moved lower after the company issued the higher capex outlook, the article says. - Lloyd Walmsley (Mizuho Americas) noted a four percentage point acceleration in AWS growth and a 16 percentage point rise in backlog growth, which he described as signs of improving cloud momentum. - The article compares AWS’s US$44 billion backlog in the fourth quarter with Google’s backlog reported north of US$80 billion, and notes Google's longer history developing TPU chips versus AWS’s more recent Trainium work. - The article reports Walmsley described early signs of ROI on the investments, and the article mentions he has an outperform rating and a US$315 price target. Summary: Investors reacted to the larger-than-expected capex forecast by moving shares lower and renewing questions about the timing of AI-related payoffs. The article reports AWS showed signs of improving momentum while still lagging some peers on training-chip development. Undetermined at this time.