AMZN Stock Rises Premarket, CEO Jassy Defends AI Spend: ‘We’ve Lived This Movie Before With AWS’

• Amazon shares gained marginally in Tuesday’s premarket trading, set up for gains for a fifth straight day.
• Jassy argued that investment precedes demand and that Amazon would make strong returns on its investment.
• Stocktwits sentiment for AMZN was ‘extremely bullish’ for a second day on Tuesday.

Amazon.com, Inc. CEO Andy Jassy on Monday called AI the “biggest technology transformation of our lifetimes” and reiterated confidence in returns from the company’s heavy investments in AI infrastructure and data centers.

In an interview with CNBC, Jassy described Amazon’s $200 billion capital expenditure as a scaled-up repeat of the AWS playbook, arguing that investing ahead of demand will drive long-term growth across businesses like AWS and Trainium chips.

“We have lived this movie once before in the first wave of AWS, where we had this same type of curve where we were spending so much CapEx in the short term, and then we all really liked the free cash flow and the ROIC (Return on Invested Capital) a few years later,” Jassy said. 

“And I think the same story is going to play out, except with just much larger revenue and free cash flow downstream,” he said that data centers have 30 years of use life and monetization and revenue from those assets picks up over time.

Amazon stock gained 0.4% in premarket trading on Tuesday. Shares are up 18% year to date. 

Jassy’s remarks come amid a growing debate over whether AI investments will deliver the expected returns. Big Tech firms, excluding Apple, announced sharply higher spending at the start of the year, weighing shares before a rebound in April.

AMZN’s Logistics Play

In other news, Amazon on Monday said it is opening its freight and logistics services to third-party customers, expanding access beyond its own marketplace sellers.

However, Morningstar analysts indicated that they see little marital impact on the business or the stock in the near term from the move. “We maintain our fair value estimate of $280 for wide-moat Amazon as we view the announcement mostly as a continuation of what it was already doing. Over time, it is possible Amazon could benefit from being a one-stop shop with a full menu of supply chain services,” they said in a report.

On Stocktwits, the retail sentiment for AMZN has held up in the ‘extremely bullish’ zone for two days, amid extremely high’ message volume. AMZN stock is heading for its fifth straight day of gains.

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