Investment Wisdom Always Says Buy Assets, So Don’t Ignore That Wisdom As It Relates To This Hyperscaler – AOL

Quick Read

• AWS revenue surged 37% to $42B in Q2, its fastest growth in 18 quarters, with a $496B backlog and 2027 capacity already largely reserved.

• Amazon trades at a lower 6.60x book value than Microsoft’s 8.69x, while its ad revenue grew 26%, outpacing both Google Search and YouTube.

• Andy Jassy sees AWS as a potential trillion-dollar revenue business, but trailing free cash flow sits at -$7.6B and long-term debt has nearly doubled.

I’ve added Amazon (NASDAQ:AMZN) to my portfolio all year. The latest earnings report supports my thesis that productive assets create value before they generate cash. Amazon is building those assets now, ahead of the returns.

Why Amazon’s Buildout Matters Now

Amazon is investing money into data centers, chips and servers that management expects to earn for decades. Data centers monetize for 30-plus years. Servers break even in “a little less than three years”. Most AI capacity gets contracted for at least five-year terms. I own a landlord whose buildings…