Asymmetry Keeps Me Hitting The Buy Button on Amazon

Asymmetry Keeps Me Hitting The Buy Button on Amazon Alex Sirois Thu, September 17, 2026 at 10:10 PM GMT+9 5 min read AMZN +2.10% MSFT +1.02% GOOG +1.02% WMT -0.52% Quick Read AMZN is up just 7% YTD while AWS grows 37% YoY with a $496 billion backlog, its fastest growth in 18 quarters.

Unlike MSFT or GOOGL, AMZN delivers five straight quarters of AWS acceleration plus an AI and chips run rate each exceeding $25 billion.

Amazon's $200 billion 2026 capex looks painful, but the lion's share of 2027 capacity is already pre-reserved under multi-year contracts.

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I keep buying Amazon (NASDAQ:AMZN) because the setup in front of me is the cleanest risk-reward asymmetry I own. The stock is down 5.87% over the past month and up only 6.56% year to date, while the business underneath it just posted the fastest AWS growth in 18 quarters. That gap is why I keep adding.

My thesis is simple. Amazon is spending like a company that sees demand it cannot fill, and the market is pricing it like a company whose free cash flow just went negative. Both statements are true. Only one of them matters in ten years. Trailing-twelve-month free cash flow is -$7.6 billion, and Q2 capital expenditures hit $54.2 billion. That is the near-term pain. On the other side of it sits a data-center footprint management said can be monetized for 30-plus years once online.

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First, AWS is compounding into something larger. Q2 AWS revenue was $42.23 billion, up 37% year over year, with an annualized revenue run rate of $169 billion and a backlog of $496 billion, growing triple digits year over year. Andy Jassy told the Street he now believes AWS can be a "trillion dollar annual revenue business for us in time." The 39.4% AWS operating margin tells me the growth is not being bought with giveaways.

Second, the ad business keeps quietly turning into a monster. Advertising revenue was $19.81 billion, up 26% year over year. That is a high-margin stream layered directly on top of the retail flywheel, and it flows through operating income, which grew 43.24% year over year in Q2.

Third, the balance sheet lets Amazon absorb the capex cycle without sweating. Debt-to-equity is 0.37, net debt to EBITDA is 0.45, and interest coverage is 35.17 times. Return on equity still runs 22.29%. Companies with a broken model do not post those numbers.

I own cloud peers, but my incremental dollar goes here. Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) are strong hyperscaler operators, but neither has Amazon's specific setup: an AWS unit that just accelerated for the fifth straight quarter, custom-silicon economics where Graviton offers 30% to 40% better price performance and is used by 98% of the top 1,000 EC2 customers, and an AI plus chips run rate that each eclipsed $25 billion growing triple digits. On the retail side, Walmart (NYSE:WMT) is the natural comparison, but Amazon is already the second-largest grocer in the United States with grocery gross merchandise sales exceeding $150 billion last year, and it owns AWS, ads, Prime Video, and Zoox on top of that. I am paying 20 times trailing earnings for the whole stack.

The real risk is the capex bill. 2026 capex is planned at roughly $200 billion, and prediction markets currently price a 91.5% chance capex exceeds $200 billion. If AI demand softens before those data centers monetize, free cash flow stays ugly. What keeps me buying anyway is that the "lion's share" of 2027 capacity is largely reserved and most AI capacity is being contracted for at least five-year terms. That is contracted revenue waiting for a switch to flip, and it is also why the power, cooling, and networking suppliers behind those data centers keep showing up in our free report on seven AI infrastructure stocks that aren't chipmakers.

I own Amazon because the market is charging me for the risk today and giving me the compounding for free. As long as AWS backlog keeps building and Jassy keeps writing checks against contracted demand, my finger stays on the button.

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