Amazon’s (AMZN) big spending on AI investments is only just beginning, JPMorgan tech analyst Doug Anmuth warns.

“We do not expect capex growth to decelerate or slow next year, and as such we project capex of $395 billion in 2027 (+77% year over year) followed by $476 billion in 2028 (+20% year over year),” Anmuth wrote in a new note.

Amazon CEO Andy Jassy said last week the company would spend “meaningfully more” on capex in 2027, without providing a number. The company estimated its capex would hit $220 billion in 2026.

Anmuth added, “We believe management’s strong visibility into demand gives it the confidence to underwrite 40%+ growth over the next two years and to invest even more aggressively in AI compute infrastructure.”

The large checks Amazon cut to build out its AI infrastructure caught up with it in the third quarter.

Amazon’s free cash flow decreased to an outflow of $42.4 billion for the trailing 12 months, driven primarily by a year-over-year increase of $94.8 billion in purchases of property and equipment. This increase primarily reflects investments in artificial intelligence, Amazon said.

This compares to a free cash flow inflow of $14.8 billion for the trailing 12 months ended Sept. 30 of last year.

Investors headed for the exit on Amazon stock post-earnings. Shares were down over 1% on Friday, but they bounced back Monday, taking the stock’s year-to-date advance to 9%. The S&P 500 is up 11% on the year.

“Meaningfully more” now has a number next to it, thanks to Anmuth. A very, very large number.

https://finance.yahoo.com/markets/stocks/article/amazon-is-on-a-course-to-spend-half-a-trillion-dollars-in-a-single-year-jpmorgan-163113505.html?shem=aimgspe,