Sep. 8 at 9:49 PM
$AMZN has done this before.
Amazon has repeatedly gone through massive investment cycles where free cash flow gets crushed in the short term, only to come back much stronger once that capacity starts producing returns.
The pandemic is the clearest example.
Amazon doubled the fulfillment footprint it had spent 25 years building in roughly two years.
FCF went from:
2020: +
$31.0B
2021: -
$9.1B
2022: -
$11.6B
2023: +
$36.8B
Once the buildout slowed and Amazon optimized the network, cash flow exploded higher.
Now Amazon is doing it again, except this investment cycle is very different.
This time it’s largely about AI and AWS infrastructure.
Amazon now expects roughly
$220B in cash capex this year, while AWS is growing nearly 37% YoY, its AI business has surpassed a
$25B annual revenue run rate, and AWS backlog has reached
$496B.
And even with all that spending, Amazon says it still doesn’t have enough capacity to meet demand.
