Amazon and Google AI Deals Lift Stocks, but DeepValue Report Signals Caution Amidst Capex and FCF Strain

What happened

Amazon and Alphabet shares rose on June 4 after both companies announced AI deals, briefly shrugging off broader tech sector concerns. However, the latest DeepValue master report maintains a WAIT rating on Amazon with a price of $274, emphasizing that near-zero free cash flow and a $147B trailing capex burden require concrete proof of returns. The report highlights that while AWS's 28% growth and $364B in remaining performance obligations provide revenue visibility, the investment cycle has compressed TTM free cash flow to just $1.2B. Until the Q3 2026 disclosures show sequential FCF improvement and sustained AWS backlog growth, the stock remains vulnerable to headline-driven volatility and regulatory overhang from the FTC case. Thus, the positive news does not alter the underlying investment calculus that demands observable financial inflection, not just deal announcements.

Implication

In the near term, the AI deals may provide a short-term boost to sentiment, but the core investment case hinges on two observable proofs by Q3 2026: sequential improvement in trailing-12-month free cash flow from the current $1.2B level and continued growth in AWS remaining performance obligations ($364B). Without these, the stock will continue to trade on long-dated ROI narratives, leaving it exposed to pullbacks if capex or regulatory headlines turn negative. Investors already exposed might consider trimming above $310 (the report's trim level) given the current price near $274. The attractive entry level remains $240, offering a margin of safety if the cash-flow trough extends. For new positions, waiting for the Q2 2026 earnings disclosure in late July or early August is prudent to assess whether the AI spending wave is translating into paid utilization and cash generation.

Thesis delta

The news does not shift the existing thesis. The DeepValue report's call remains WAIT with a requirement for two proofs: FCF recovery and AWS backlog growth. The AI deals are consistent with the bull scenario but do not yet provide the necessary financial evidence, keeping the rating unchanged at 3.5 conviction.