Amazon’s Good Problems To Have Keep Me Hitting The Buy Button

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I added to my Amazon (NASDAQ:AMZN) position again. Every quarter, the company gives me another reason to keep buying. Amazon’s problems are ones I’m glad to own: customers take AI capacity faster than AWS can build it, the capital budget increases to keep up, and retail margins keep rising even with all that spending.

What Keeps Pulling Me Back to the Buy Button

Amazon runs three compounding drivers under one ticker: the cloud, the store, and the ad business built on top of the store. On the Q3 call, management said customers are absorbing AWS capacity “almost as fast as we install it.” When demand runs ahead of supply at a business this large, I want more shares.

Three Receipts Behind My Conviction

First, AWS sped up again. Revenue reached $45.98B, up 39% YoY, its fastest growth in nearly 5 years. Operating income rose to $17.77B from $11.43B, and backlog stands at $578 billion. Chief executive Andy Jassy projects AWS growth of over 40% both in 2027 and in 2028.

Second, retail keeps getting more profitable. North America operating income rose to $8.72B from $4.79B, and the company-wide operating margin hit 13.9%, Amazon’s highest ever. Grocery is increases about 3x faster than the rest of the store, and that habit brings customers back week after week.

Third, the balance sheet can carry the expansion. Debt-to-equity is at 0.37, interest coverage at 35.17x, and operating cash flow reached $42.42B, up 19.41%. Q3 GAAP EPS of $1.89 missed expectations of $1.96, but the year-ago quarter included $9.5B pre-tax Anthropic gains. Operating income rose 61.15%.

Why My Money Skips Walmart, Alphabet and Microsoft

Walmart (NASDAQ:WMT) is the obvious retail alternative. It trades at a P/E of 45 compared with Amazon’s 35, and its operating margin of 4.18% trails Amazon’s 11.16%. At Amazon, I pay a lower multiple for a wider margin.

Alphabet (NASDAQ:GOOGL) looks cheaper at a P/E of 12. Even so, Q3 free cash flow came in at -$9.065 billion, and it raised $4.3 billion by selling Class A shares and $8.1 billion by selling Class C shares at market. I would rather not own a company that funds its capex by diluting me.

Microsoft (NASDAQ:MSFT) has Azure growing 48%, but its operating income increases 20.95% and its Devices and Consumer segment fell 3%. Amazon pairs its cloud business with a consumer business whose margins keep expanding.

Risk That Could Actually Hurt This Position

The spending is the risk. Q3 capex reached $77.26B (up 120.14% YoY), 2026 should land near $220B, and management plans to “spend meaningfully more in 2027.” Trailing free cash outflow totals $42.4B. If AI demand cools before the capacity pays back, I own expensive data centers. Memory chip supply and tariffs add more pressure. All that capex also flows straight to the power, cooling, and networking vendors behind the data centers, which is why we rounded up seven of them in a free AI infrastructure report.

I accept that risk because customers reserve capacity years ahead. Jassy said AWS has “very good visibility into 2027 and 2028 and some of 2029 too.”

What Keeps Me Adding From Here

Over the past year the stock fell 1.3% while the business pulled ahead, so I keep buying at roughly the same price. Amazon pays no dividend, which means I own it for compounding. The ten-year return of 564.04% shows what that compounding can do. Q4 operating income guidance of $28.5B to $33.5B compares with $25.0B a year ago. As long as demand keeps outpacing supply, I’ll keep buying.

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