Amazon's Aggressive Capital Allocation as a Positive Signal

19 days ago

"The next on my list is Amazon, which also experienced a less than stellar year in 2025. Again, due to the rising impacts of tariffs and the company's aggressive spending on artificial intelligence, its capital expenditures turned out to be 25% or roughly $25 billion more than it was expecting. Now, some investors saw that as a bad sign, but I actually saw that as a good sign. When I'm evaluating a company that I feel has a strong management team and I see that management team allocating more money to a certain category, I'm generally optimistic about the results about the potential return on that investment. If that management team has proven to me that they are effective allocators of capital, which I do believe Amazon's management team is effective allocators of capital. The intrinsic value per share I calculated at $270 is well above the company's current market price of $232."

The speaker highlights Amazon's expanded capital expenditure as a positive indicator of effective management and future returns, noting that its intrinsic value ($270) significantly exceeds its current price ($232), making it an attractive buying opportunity for the long term.

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