Amazon: A Temporary Descent

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The earnings season, a time of ritualistic pronouncements and shareholder palpitations. One observes, with a certain detached amusement, the tremors running through the digital agora. Advanced Micro Devices, Microsoft – they stumble, they fall, uttering prophecies of doom. Alphabet, that monolithic entity, merely shuffles its feet, reporting ‘impressive results’ – a phrase as hollow as a politician’s promise. And now, Amazon. A decline of six percent, they say. A mere twitch, I assure you, in the grand scheme of things. A temporary descent into the shadows, before the inevitable ascent. One anticipates a rebound, not in months, but in the languid stretch of 2026.

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A Market’s Peculiar Humors

Two specters haunt the market’s calculations. Firstly, a miss on Wall Street’s earnings estimate. A trifle, really. Analysts, those oracles of the obvious, expecting perfection in a world steeped in imperfection. Secondly, a projected capital expenditure of two hundred billion dollars. A sum that evokes visions of gilded warehouses and automated legions of delivery drones. The market, predictably, recoils. But this, my friends, is a classic overreaction. A collective fit of nerves. As if a company daring to invest in its future is a cause for alarm. It reminds one of a provincial theater director lamenting the cost of new costumes, oblivious to the potential for artistic triumph.

The earnings miss, they claim, amounted to a mere five cents per share. Five cents! A sum so paltry it scarcely registers on the scale of cosmic insignificance. Yet, the market seizes upon it with the fervor of a religious zealot. Let us not forget the ‘special charges’ – a euphemism for the inevitable costs of progress. Two point four billion dollars, swept under the rug as if they never existed. And the revenue? Two hundred and thirteen point four billion – exceeding expectations. A triumph, swiftly overshadowed by the specter of capital expenditure. It’s a comedy of errors, played out on the global stage.

The two hundred billion, of course, is the crux of the matter. Analysts, those meticulous bean counters, anticipated one hundred and forty-seven billion. A mere thirty-three billion dollar difference. A rounding error, in the grand scheme of things. But the market, ever susceptible to panic, interprets it as a sign of impending doom. The truth, however, is far more prosaic. Most of this expenditure will flow into Amazon Web Services – AWS. And Andy Jassy, the company’s CEO, has a perfectly reasonable explanation. ‘High demand,’ he proclaims. ‘Customers really want AWS for core and AI workloads.’ A simple truth, obscured by the market’s relentless pursuit of short-term gains.

Investments, you see, are not inherently bad. They are the lifeblood of progress. Jassy assures us that Amazon is ‘monetizing capacity as fast as we can install it.’ He speaks of ‘strong return on invested capital.’ And I, for one, believe him. Amazon has a knack for turning ambition into reality. It’s a rare gift, in this age of empty promises and fleeting trends.

A Business Firing on All Cylinders (Despite the Fuss)

Let us not lose sight of the fundamental truth: Amazon’s business remains robust, even flourishing. Revenue jumped fourteen percent year over year. Earnings rose six percent, a figure that would have been even higher, had it not been for those pesky ‘special charges.’ A solid performance, dismissed with a wave of the hand. The market, it seems, prefers melodrama to substance.

AWS, in particular, is accelerating. Revenue soared twenty-four percent, the strongest growth in thirteen quarters. An impressive feat, considering the sheer scale of the operation. Jassy rightly points out that twenty-four percent growth on a one hundred and forty-two billion dollar base is far more significant than a higher percentage on a smaller foundation. A simple observation, lost on those who prefer to dwell on the negative.

The cloud service unit’s backlog now stands at two hundred and forty-four billion dollars, up forty percent year over year. A staggering figure, indicative of the insatiable demand for cloud computing. The market, however, remains fixated on the capital expenditure. It’s as if they believe Amazon is building a monument to its own hubris.

Amazon has also become an advertising juggernaut. Revenue increased twenty-two percent to twenty-one point three billion dollars. Sponsored product advertising on the e-commerce platform is particularly lucrative. And Prime Video ads are now contributing meaningfully to revenue growth. The company, it seems, can do no wrong – except, of course, in the eyes of the perpetually pessimistic market.

The e-commerce business is performing well, particularly in international markets. A recent study found that Amazon is the lowest-cost retailer in the U.S. for the ninth consecutive year, with prices fourteen percent lower than other online retailers. And the company continues to accelerate the speed of its deliveries, boosting customer satisfaction. A virtuous cycle, fueled by innovation and efficiency.

Short-Term Tremors, Long-Term Foundations

Pullbacks in Amazon’s share price have created excellent buying opportunities in the past. And I am confident this will happen again. Amazon is one of the widest-moat stocks I know, thanks in part to its low-price structure and massive scale. And long-term moats are far more important than short-term fluctuations. The market, however, is often blinded by the present, unable to see the forest for the trees. It’s a tragic flaw, repeated throughout history.

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2026-02-09 12:53