Amazon: A Cloud and a Prayer

Amazon Drone

Amazon. [AMZN 2.31%]. They sell everything, you know. Everything. And still, the market treats them like a stray dog. So it goes.

They’re the biggest by sales now, which is a statistic, really. A number floating in the ether. They should be getting parades. Instead, the stock price dips, and everyone pretends to be surprised. Down 8% in a year. A mere blip in the grand, meaningless scheme of things.

Is this a chance to buy? Or a chance to watch your money slowly evaporate? Let’s look at it. Not that it matters much in the long run.

Shifting Sands

Andy Jassy, the CEO, talks a lot about artificial intelligence and the cloud. He says everything is moving to the cloud. 85 to 90 percent of all information technology, he claims. A lot of numbers. It’s like watching sand shift. Inevitable, but not particularly exciting.

He’s spending $200 billion by 2026. A truly obscene amount of money. Building the infrastructure for this shift. As if infrastructure can solve anything. They need it, he says. To capitalize. To grow. As if growth is an end in itself.

“We are monetizing capacity as fast as we can install it,” he said. A sentence that sounds vaguely threatening. Like a robot learning to speak. They’re building it, and people will buy. It’s a system. A perfectly predictable system.

He explained defensively that they anticipate demand. That they’re building for the demand. As if anticipating demand justifies spending obscene amounts of money. It’s a pre-emptive strike against…what, exactly? The future? So it goes.

The cloud segment, Amazon Web Services, grew 24% last quarter. Bedrock, their AI builder, increased 60%. Numbers. More numbers. They mean something, I suppose. To someone.

What’s Really Going On

The price-to-earnings ratio is 29. Near a decades-low. But the price-to-free cash flow ratio is 296. That’s…a lot. A truly astonishing number. Like trying to count all the grains of sand on a beach.

Free cash flow decreased from $38.2 billion to $11.2 billion. Because of the AI investments. They’re spending money to make money. A classic story. A story as old as time. It makes sense, really. The drop in price makes sense. They’re shelling out cash. It affects things. Now. In the present. Which is always a problem.

But it’s an opportunity, if you’re patient. They’re building an AI platform. It’s likely to pay off. Eventually. There will be volatility. There always is. But if you can hold on, now could be a good time to buy. Or not. It hardly matters, does it? So it goes.

2026-02-12 22:14

Shifting Sands

What’s Really Going On

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