Why Amazon’s Spending Spree Makes It a Must-Buy Now

For investors in Amazon (NASDAQ:AMZN), 2025 proved to be a lackluster year. The stock only rose about 5%, trailing the S&P 500‘s 16% advance and also lagging most of its Magnificent 7 peers, including Apple (NASDAQ:AAPL), which gained just 8%. 

This underperformance stemmed from concerns over Amazon’s heavy capital spending and slowing cash flow generation. Yet, beyond a simple reversal of fortunes, the strategic investments position it for strong gains in 2026 as these efforts begin to yield results.

Heavy Spending Pressures Cash Flow

Amazon’s free cash flow has faced ongoing declines amid aggressive investments. In the third quarter, trailing 12-month free cash flow dropped to $14.8 billion, down 69% from $47.7 billion a year earlier. This followed a slide from $18.2 billion in the second quarter, driven by a $50.9 billion year-over-year increase in property and equipment purchases. Cash capital expenditures reached $34.2 billion in Q3…