Big Tech's $600B Capex Pile-Up Puts Amazon's AI Spending Under the Microscope

What happened

As earnings season approaches, Wall Street is focused on the combined ~$600 billion in capital expenditures planned by the four largest hyperscalers for 2026, including Amazon. Amazon's own capex surged to $128.3 billion in 2025 and is expected to rise further in 2026, primarily to support AWS AI infrastructure. While AWS saw a promising re-acceleration with 24% YoY growth in Q4-2025 and a $244 billion backlog of performance obligations, the sheer scale of spending has investors demanding clearer evidence of ROI. The DeepValue report maintains a Potential Buy rating at $212.8, but warns that failure to sustain >20% AWS growth or stabilize capex intensity would undermine the thesis. The news underscores that Amazon is not alone in this spending race, making the need for rapid monetization even more critical to investor sentiment.

Implication

The broader anxiety over hyperscaler AI spending reinforces the DeepValue report's emphasis on execution: Amazon must demonstrate that its AI capacity build is converting backlog into revenue fast enough to justify capex. While the $244B performance obligations and custom silicon adoption provide a buffer, any signs of deceleration in AWS growth or further capex escalation could compress the stock's multiple. Investors should watch Q1 2026 results for AWS growth versus the 24% exit rate and any update on capex trajectory. The thesis hinges on AWS sustaining >20% growth through 2026 while capex as a share of revenue peaks. If those conditions hold, the current valuation offers upside; if not, re-assessment is warranted.

Thesis delta

The macro narrative of excessive AI spending across all hyperscalers raises the scrutiny on Amazon's own capex payback timeline, but does not alter the base-case scenario that AWS re-acceleration and large backlog support the investment. The report's thesis remains intact: 6-12 month setup depends on AWS growth durability and capex stabilization. The new news amplifies the risk that market sentiment could deteriorate if near-term monetization proof is insufficient.