Amazon.com, Inc.

(NASDAQ Global Select)
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Bullish +65

Amazon Jumps 4% on Expanded AWS Chip Deal: Why Is NVIDIA Falling 4%?

AI-generated analysis

📈 Amazon stock jumped 4% to $265.25 after confirming an expanded partnership with NVIDIA to deploy 2 million additional GPUs for AI and robotics.

🚀 AWS revenue surged 37% year over year in Q2 to $42.23 billion, driven by AI infrastructure and agentic workload demand.

💰 Amazon's capital expenditures are projected to hit roughly $220 billion in 2026, reflecting massive investment in AI compute capacity.

📉 Trailing free cash flow turned negative at -$7.6 billion over the twelve months ended June 30 due to high capex intensity.

🤝 The deal confirms AWS momentum as both AI and Chips businesses now eclipse $25 billion in run rates according to CEO Andy Jassy.

📊 Evercore ISI raised its Amazon price target to $355 from $315.16 following a survey indicating strong Alexa AI shopping conversion.

🔄 NVIDIA shares fell 4% on the same news due to a broad semiconductor selloff rather than any negative impact from the expanded deal.

📉 Microsoft and Alphabet also rose 2%, showing hyperscale platforms with visible AI commitments are outpacing their chip suppliers.

⚠️ Management warns that memory scarcity is being driven largely by the current AI build-out, creating potential supply constraints.

🔮 The forward story hinges on 2027 AWS monetization and NVIDIA's ability to catch up to surging demand for compute.

Bullish Signals
  • Amazon stock surged 4% to $265.25 following a confirmed expansion of its GPU infrastructure deal with NVIDIA.
  • AWS revenue grew 37% year over year in Q2 to $42.23 billion, marking the fastest growth in 18 quarters.
  • CEO Andy Jassy stated that AI and Chips businesses each now exceed $25 billion in run rates.
  • The expanded partnership deploys 2 million additional GPUs for AI, robotics, and agentic workloads.
  • Evercore ISI raised its price target to $355 from $315.16 citing strong Alexa AI shopping conversion.
Risk Factors
  • Amazon's trailing free cash flow turned negative at -$7.6 billion over the twelve months ended June 30.
  • Capex is set to hit roughly $220 billion in 2026, significantly higher than the $131 billion spent in 2025.
  • Investors are concerned about capital intensity and depreciation pressure associated with the massive infrastructure buildout.
Full Analysis
Amazon shares surged 4% to $265.25 following a major expansion of its GPU infrastructure deal with NVIDIA, which involves deploying an additional 2 million GPUs for AI, robotics, and agentic workloads. This announcement validates strong momentum within Amazon Web Services (AWS), where second-quarter revenue grew 37% year over year to $42.23 billion, marking the fastest growth in 18 quarters. CEO Andy Jassy highlighted that both AI and Chips businesses now exceed $25 billion in run rates, signaling a robust shift toward high-value compute infrastructure. Despite the positive catalyst for Amazon, the broader market reaction was mixed as NVIDIA shares fell 4% amid a sector-wide semiconductor selloff unrelated to the specific deal terms. The divergence highlights Wall Street's view that hyperscale cloud platforms with visible AI commitments are currently outperforming their upstream chip suppliers. Analysts at Evercore ISI raised their price target for Amazon to $355, citing strong demand and conversion rates in Alexa AI shopping as key drivers of this bullish sentiment. The article notes significant capital intensity concerns for Amazon, projecting capex to reach approximately $220 billion in 2026, up from $131 billion in 2025. Consequently, trailing free cash flow has turned negative at -$7.6 billion over the twelve months ended June 30, contrasting with $161.4 billion in operating cash flow. Investors are closely watching whether Amazon can sustain its gains as the technology sector weakens and if the massive infrastructure buildout translates into profitable monetization by 2027.