Amazon hikes 2026 capex to $220 billion due to higher memory costs
AWS sales expanded 37% year over year, which trounced analysts' expectations for 31% growth.
Amazon's decision to increase its 2026 capital expenditure to $220 billion, driven in part by higher memory costs, may have implications for the company's profitability and cash flow. The increased capex is likely a response to the growing demand for cloud infrastructure, as evidenced by the strong 37% year-over-year growth in AWS sales. This growth outpaced analysts' expectations of 31%, highlighting the continued momentum in Amazon's cloud business.
The higher capex may put pressure on Amazon's margins, particularly if the company is unable to pass on the increased costs to customers. However, the strong growth in AWS sales suggests that Amazon is well-positioned to invest in its cloud infrastructure and capitalize on the trend towards cloud adoption. The increased investment in memory and other infrastructure may also help Amazon to maintain its competitive edge in the cloud market.
Looking ahead, investors will be watching Amazon's ability to balance its growth ambitions with profitability. The company's currency exposure, particularly in its international operations, will also be an area of focus. As the global economy continues to navigate uncertainty, investors will be monitoring Amazon's hedging strategies and the potential impact of currency fluctuations on its financial performance.
Originally reported by cnbc.com. CurrencyNews adds analysis for finance & markets readers.