Amazon's AI Ambitions Hit a Power Crunch as Wall Street Waits for October 29
Published on 10/22/2026 at 18:02 | Editorial boerse-global.de
Amazon shares fell 3.7% on Wednesday, caught in a broad retreat across technology and AI names as global AI stocks slumped and oil prices climbed. Yet the sharper story for investors lies beneath the day-to-day noise: the company is buying artificial-intelligence hardware at a furious clip, and a chunk of it is reportedly sitting idle while it waits for electricity.
Hardware in Search of a Socket
Business Insider reported Tuesday, citing internal emails, that AWS expects NVIDIA GB300 server racks worth roughly $5 billion, with further deliveries potentially reaching $3 billion a month for the foreseeable future. Some of that equipment is being stored in AWS data centers because of insufficient power supply.
Amazon pushed back on the characterization. The company called warehousing hardware near its intended deployment site sound business practice and denied having no plan to put it to use. That distinction matters: preparatory storage is not the same as permanently unproductive capital. Still, the report throws a spotlight on the gap between when chips are bought and when they start earning.
The scale of the buildout is hard to overstate. Under an August 26 announcement, AWS and NVIDIA plan to weave 2 million additional NVIDIA GPUs into AWS infrastructure across 2027 and 2028.
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Spending Outruns the Cash Machine
That expansion is already consuming more money than Amazon generates from operations. Operating cash flow for the twelve months through June 30, 2026 came in at $161.403 billion, while net capital expenditure of $169.007 billion left free cash flow at ?$7.604 billion. Amazon's definition of free cash flow excludes finance lease payments, a nuance worth keeping in mind.
Media reports put the company's 2026 investment plan at around $220 billion, with higher memory prices explaining part of the increase. More spending, in other words, does not automatically translate into a proportionally larger data-center footprint.
Two Analysts, Two Directions
Wall Street's signals have been mixed. Morgan Stanley lifted its Amazon price target to $350 from $335 on Monday, with analyst Brian Nowak keeping an "Overweight" rating and pointing to five potential growth drivers. Wells Fargo moved the other way on October 12, trimming its target to $329 from $338 while analyst Ken Gawrelski also maintained an "Overweight" stance.
The bullish case is not without evidence. AWS grew revenue 37% to $42.232 billion in the second quarter of 2026, and Nowak continues to count Amazon among his preferred picks.
A German Bet and a Shopping-Agent Split
On the corporate side, Amazon said Tuesday it plans to invest more than €16 billion in Germany by 2027, with €4.8 billion earmarked for AWS cloud and AI infrastructure. Announced spending, however, is a different matter from reported results.
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Competition over AI-assisted shopping is also taking shape. Amazon reportedly blocked Meta's Muse, while Walmart welcomed AI shopping agents — a contrast in strategy that surfaced in a report published Tuesday. The divergence shows that AI in retail is not merely a question of technical capability; it is also about which outside applications companies choose to let in. How Amazon's approach pays off financially cannot yet be quantified.
October 29 Looms Large
The next hard data point arrives on October 29, when Amazon reports third-quarter 2026 results after the US market close and holds a follow-up call. Beyond AWS growth, investors will be watching capital spending, margins and free cash flow.
For now, a soft technology backdrop, conflicting analyst moves and pending earnings all converge on the same unresolved question: how quickly can Amazon turn its sprawling infrastructure into revenue and cash? Wednesday's decline has yet to be tied to any confirmed company-specific trigger.
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