Amazon's AMZN unprecedented datacenter expansion is emerging as the company's most powerful growth catalyst, with AWS infrastructure investments reaching historic levels that position the stock for sustained gains. The company's third-quarter 2025 results delivered AWS revenues of $33 billion, representing 20.2% year-over-year growth, the fastest pace since 2022.
Amazon committed $125 billion in capital expenditure for 2025, with the vast majority directed toward AWS infrastructure. The third-quarter alone saw $34.2 billion in cash capex, while the company added 3.8 gigawatts of power capacity over 12 months — the largest expansion in cloud history.
The datacenter pipeline shows no signs of slowing. December 2025 brought multiple announcements, including a $7 billion, 14-year framework agreement with Telangana, India, to expand AWS Hyderabad infrastructure, plus a $15 billion commitment for Northern Indiana facilities delivering 2.4 gigawatts of capacity. The $11 billion Project Rainier AI supercomputer in Indiana is already operational with 500,000 Trainium2 chips.
AWS now operates 38 regions across 120 availability zones. The infrastructure backlog stands at $200 billion, signaling robust future demand.
With capacity planned to double by 2027 and 2026 capex expected to exceed current levels, Amazon's datacenter buildout represents a structural growth story. Operating income from AWS reached $11.4 billion in the third quarter, demonstrating that infrastructure spending is translating directly into profitability gains.
Rivals Match Infrastructure Pace
Microsoft MSFT and Alphabet GOOGL-owned Google are pursuing comparable datacenter strategies with substantial capital commitments. Microsoft allocated $80 billion for fiscal 2025 infrastructure spending, with Azure cloud revenues advancing 33% year over year. Microsoft's fiscal first-quarter capex reached $20 billion, predominantly targeting AI-enabled facilities. Google parent Alphabet revised 2025 Capex guidance upward twice, reaching $91-$93 billion from an initial $75 billion forecast. Google Cloud generated $13.6 billion in the third quarter with 32% growth, though capacity constraints limited revenue potential. Microsoft maintains over half its investment domestically, while Google deployed $23.9 billion in the third quarter alone — two-thirds allocated to processors and servers. Both Microsoft and Google face tight supply-demand dynamics, with datacenter expansion timelines extending into 2026 as competition for AI infrastructure intensifies across the hyperscale sector.
AMZN’s Share Price Performance, Valuation & Estimates
Amazon shares have returned 8.6% in the past six-month period compared with the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 9% and 8%, respectively.
AMZN’s 6-Month Price Performance
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From a valuation standpoint, AMZN stock appears overvalued, trading at a forward 12-month price/earnings ratio of 29.51X, higher than the industry’s 24.42X. Amazon has a Value Score of C.
AMZN’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AMZN’s 2025 earnings is pegged at $7.17 per share, which has seen an upward revision of 4.8% over the past 60 days. This indicates a 29.66% increase from the figure reported in the year-ago quarter.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
Amazon currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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