Amazon CEO Andy Jassy gave investors an unusually frank detail on July 30.
“Data center capital is spent starting two years before we can put servers into them to start monetizing,” he said on the company’s second quarter earnings call. In plain terms, when Amazon builds a data center, the money goes out two years before any money comes in.
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And the company is building a lot of data centers. Amazon spent $53.1 billion on capital projects in the quarter alone, and Jassy said it now expects to spend about $220 billion for the full year, up from the roughly $200 billion it projected earlier. He blamed higher memory prices.
You can own a piece of Amazon without ever having chosen it. Vanguard’s latest How America Saves report, which covers nearly five million workers, found 61% of participants hold their whole balance in a single target-date fund — the all-in-one option that accounts for 98% of the defaulted plans assigned.
Those funds hold hundreds of U.S. stocks, and Amazon is among the five largest in the S&P 500. So if that’s where your 401(k) sits, some of this spending is being done with your money — on data centers Amazon spends two years building before they earn anything.
Where Amazon’s record profit came from
Amazon reported net sales of $200.6 billion for the quarter ended June 30, up 20% from a year earlier. Operating income came in at $27.5 billion, against $19.2 billion a year earlier. AWS, the company’s cloud division, grew 37% to $42.2 billion in sales — what Amazon called “its fastest growth in 18 quarters.”
One thing flattered those numbers, though. Net income of $62.6 billion included a $53.4 billion non-operating gain that Amazon said was “primarily from our investments in Anthropic,” the AI developer. Amazon hasn’t sold any of that stake, so none of the gain is money it can spend.
Jassy also said the AWS backlog — work customers have contracted for but that hasn’t started yet — reached $496 billion.
https://finance.yahoo.com/markets/stocks/articles/amazons-debt-nearly-doubled-129-140000968.html
