Amazon announced it will spend $220 billion on capital expenditures in 2026 because memory got expensive. Not servers. Not data centers. Not fiber optic cables. Memory. The stuff your nephew installed in his gaming PC for forty bucks.
AWS sales jumped 37% year over year. Analysts predicted 31%. They were wrong by six percentage points, which means absolutely nothing for your portfolio but everything for the seventeen people who get paid to guess numbers on CNBC.
Here's what happened: Amazon looked at its budget. Saw memory prices going up. Did the math. Decided to spend an amount equal to the GDP of New Zealand on components that will be obsolete in eighteen months. Bold strategy. Really playing the long game there.
The retail trader sees this headline and thinks it's bullish. More capex means more growth. More growth means stock goes up. Stock goes up means Lambo. Lambo means everyone at the high school reunion finally respects Kyle. Kyle bought three call options expiring Friday. Kyle does not know what capital expenditure means. Kyle thinks RAM stands for Radical Asset Management.
Memory costs went up so Amazon's total spending went up by tens of billions of dollars. That's the whole story. No innovation. No breakthrough. No competitive moat. Just inflation with a press release. They could've written "things cost more now" and saved everyone four minutes.
But sure, let's all pretend this changes anything about how you should invest. Let's pretend AWS growing slightly faster than expected wasn't already priced in by algorithms that read the headline three milliseconds before you did. Let's pretend your Robinhood account gives a shit about memory costs.
Amazon will spend $220 billion. Memory manufacturers will get rich. Your calls will expire worthless. The circle of life continues, and Kyle still can't afford the Lambo.
Photo by Marques Thomas on Unsplash
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