BMO Sees $50 Billion Amazon CapEx Driving AWS Profit and EPS Gains
BMO analyst forecasts Amazon will invest roughly $50 billion in capital expenditures this year to expand AWS data centers and logistics capabilities. He argues each additional $1.5 billion in CapEx could boost adjusted EPS by about $0.10 over the next 12 months, signaling an underappreciated value driver.
1. Analyst’s CapEx Forecast
A BMO strategist estimates Amazon will allocate approximately $50 billion to capital expenditures in the upcoming year, focusing on expanding AWS data centers and enhancing its global logistics network.
2. EPS and Profit Implications
The analyst models that each $1.5 billion increment in CapEx could translate into a $0.10 increase in adjusted EPS over 12 months and contribute to margin expansion in the cloud segment.
3. Valuation Mispricing Thesis
BMO contends that the market is undervaluing Amazon’s long-term return on this CapEx, with current stock multiples failing to account for the incremental profit and cash flow generated by the infrastructure build-out.