How Andy Jassy Just Convinced Me That Amazon Stock Is a Buy
Key Points
The market hasn't been thrilled with Amazon's massive AI capital spending.
Yet, the tech titan's AI business is already growing at a rapid pace.
Amazon has always been willing to invest early in a new opportunity to get ahead.
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CEOs of public companies typically include a shareholder letter as part of their annual reports, and Andy Jassy's letters since he became CEO of Amazon (NASDAQ: AMZN) five years ago have been enjoyable and informative to read.
This year's addition was a mixture of personal story and a deeper look at some of the inner workings of the Amazon world. And while it's every CEO's job to be positive about the company's state of affairs and future prospects, Jassy made several important points that every current and potential shareholder should pay attention to now.
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Image source: Amazon.
$200 billion reasons to be confident
The market soured on Amazon as it announced more and more money spent on artificial intelligence (AI). Amazon stock fell further after the latest announcement that the company would invest an eye-popping $200 billion in capital expenditures in 2026.
Jassy seemed to be expecting this and was on the defensive when talking about it at the time. In the letter, he reiterated that, as you might imagine, management has put great thought into the investment, and that it's a no-brainer considering the opportunity. The company has debated "whether this technology is over-hyped, whether we're in 'a bubble,' and if the margins and [return on investing capital] ROIC will be appealing. My strong conviction, at least for Amazon, is that the answers are no, no, and yes," Jassy wrote.
He compared AI to electricity, and noted that it took 40 years for it to catch on as a means of powering every home and business. He sees AI adoption at a rate 10 times faster. Amazon Web Services (AWS) had a $58 million run rate three years in, and the AWS AI business has a $15 billion run rate three years in. He said that Amazon added 3.9 gigawatts of power in 2025, and it's "monetizing that capacity as fast as it's installed." That includes two clients who asked for all of the Graviton chip capacity in 2026.
Squiggly lines and Day 1 culture
If you are an ardent Amazon follower, you'll know that the company has a "Day 1" culture. It's willing to take risks to make things happen, and its innovations don't always pan out. They also don't follow straight lines; no progress does. Amazon wouldn't be the world's largest company (by sales) today if it hadn't made major moves like buying up competing e-commerce companies when it was first starting out, launching all kinds of technological advances, and starting new businesses like AWS.
Many of its projects have failed over the years, and many times it has had to go back to the drawing board when designing new technology, including parts of AWS. Jassy noted that the Bedrock platform, which is where a lot of the AI development happens, needed to be rebuilt from the ground up in the middle of scaling when the developers realized it needed a different inference engine.
The market is starting to see that it may have punished Amazon too much and that the company could demonstrate results fairly quickly. But Amazon stock is still off its high, and it's setting itself up for a massive opportunity. I have been a fan of Amazon stock for a long time, but Jassy's take has reinforced my confidence in its future.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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