Amazon (NASDAQ:AMZN) delivered solid fourth-quarter performance across its core businesses, but investors are drawing the wrong conclusions from the company’s elevated capital spending plans, according to BMO Capital Markets analyst Brian Pitz.
In a note published Friday, BMO reiterated its Outperform rating, kept Amazon as a Top Pick and lifted its price target to $310 per share, arguing that the market is “misunderstanding CapEx opportunity.”
Pitz described the quarter as a “standout quarter,” highlighting a sharp pickup in cloud momentum, including a “400bps sequential acceleration in AWS growth to +24%, the fastest growth since 3Q22 and 2pts above Street.”
He also pointed to strong performance in Amazon’s advertising business, which grew 22% year over year on a currency-neutral basis. That growth was supported by new partnerships with Roku and Netflix, as well as integrations with Spotify and SiriusXM.
According to Pitz, strength at AWS is broad-based, driven by “strong momentum in both AI and core non-AI workloads.” He singled out Amazon’s Graviton and Trainium chip offerings, noting that they now generate more than $10 billion in annualized revenue and are expanding at triple-digit growth rates.
Infrastructure investment was another focus, with Pitz noting that Amazon “added 1.2GW of capacity in 4Q25” and is targeting another doubling by 2027, which would amount to a “fourfold increase in capacity since 2022.”
While Amazon’s plan to deploy around $200 billion in capital expenditures has unsettled some investors, Pitz said the long-term upside is being overlooked. He added that BMO “applaud[s] AMZN (and peers) for leaning in on AI-related CapEx,” viewing the spending as a strategic investment rather than a headwind.