Citi Research: Amazon's Capital Expenditure Raises Concerns, Yet AWS Growth Remains Robust; Price Target Reduced to USD 265

AWS Revenue Growth: Amazon's cloud computing service, AWS, experienced a 24% year-over-year revenue growth, contributing to an increase in its e-commerce market share.

Stock Price Impact: Despite positive growth metrics, Amazon's stock price fell approximately 11% in after-hours trading due to capex guidance of around USD 200 billion by 2026, affecting free cash flow (FCF) expectations.

Future Capex and AI: Citi noted that Amazon's capital expenditure cycle could enhance AWS's AI capabilities, with a projected FCF rebound in 2027 driven by revenue growth and margin expansion.

Retail Segment Trends: In retail, improvements in inventory management, robotics, and same-day delivery services are expected to continue boosting profit margins, with Amazon maintaining a Buy rating from Citi, albeit with a reduced target price of USD 265.