Amazon's (AMZN 5.49%) earnings report on Thursday sent the stock lower, worsening an already difficult 2026 for the stock. Shares are now down more than 10% year to date. Investors were digesting the company's mind-boggling guidance for 2026 capital expenditures of about $200 billion. These aggressive investments will be driven, in large part, by the company's effort to support fast-growing demand for its cloud computing business, Amazon Web Services (AWS).
But should the stock really be selling off because of these big investment plans? In the company's fourth-quarter earnings call, Amazon CEO Andy Jassy shared some great news about these investment plans -- words that may make a difference in the stock's investment thesis.
Here's a look at Jassy's comments, as well as others he made about an important catalyst many investors may be overlooking.
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A $200 billion bet
"Customers really want AWS for core and AI workloads," explained Amazon CEO Andy Jassy. "And we are monetizing capacity as fast as we can install it."
But is this massive forecast for capital expenditures really bad news? After all, Jassy seems confident that the company can convert this spending into incremental profit over the long term.
"We have deep experience understanding demand signals in the AWS business and then turning that capacity into strong return on invested capital," Jassy explained.
In other words, Amazon's already fast-growing and diversified business likely has substantially more growth potential ahead -- for years to come.
This is great news for investors.
A $10 billion chips business
A more overlooked comment from the earnings call that is worth a closer look is the CEO's remark about the company's chip business, which is growing even faster than its cloud business.
"I think people know about our chips capability, our chips business, but I'm not sure folks realize how strong a chips company we've become over the last ten years," Jassy said during the call.
So let's get to know Amazon's chips business.
First of all, it's becoming quite large. Jassy went on to say that its chip sales are now running at an annualized revenue run rate of over $10 billion. Even more, it's growing at an extraordinarily rapid rate. Specifically, Jassy said its chip revenue is now increasing at a triple-digit rate.
Finally, Jassy seems upbeat about the long-term potential of chips because he believes competitors aren't aggressive enough on pricing.
"A significant impediment today is the cost of AI chips," Jassy said during the call.
He continued:
Customers are starving for better price performance and typically and understandably, the dominant early leaders aren't in a hurry to make that happen. They have other priorities. It's why we built our own custom silicon in training. And it's really taken off.
Reasons to be bullish
This commentary from Jassy on Amazon's capital expenditure plans and its fast-growing chips business both arguably enhance the bull case for Amazon stock.
Even more, these comments come alongside a report showing robust top and bottom-line growth. Amazon's fourth-quarter net sales rose 14% year over year, driven by broad-based growth across its business, including accelerating AWS growth. Further, the company's operating income grew from $21.2 billion in the year-ago quarter to $25.0 billion, even as capital expenditures soared year over year.
Even Amazon's guidance was good, with management guiding for first-quarter revenue to grow 11% to 15% year over year to between $173.5 billion and $178.5 billion.
Overall, I believe the market may have overreacted to Amazon's earnings report, leading to a buying opportunity for investors willing to hold shares for the long haul. While the stock isn't a bargain at 29 times earnings, I do think shares are at least somewhat attractive, warranting a small starter position.
