Amazon’s heavy spending on capital expenditures is affecting its free cash flow, but investments in data centers and AI architecture could lead to a successful 2026. AI stocks have been strong performers, and Amazon’s AWS is a key player. Despite a modest 2025, Amazon’s AI monetization and low price-to-sales ratio make it an underrated stock.

While Amazon’s e-commerce business struggled in 2025, its AWS cloud service thrived. The company’s AI infrastructure investments, like data centers and custom AI chips, are driving up capital expenses. Despite this, Amazon’s valuation remains low compared to its peers, making it a potential bargain for investors in 2026.

Amazon’s spending on AI infrastructure has caused its free cash flow to decline, but the company’s strategic moves in the cloud computing space could pay off in the long run. While some may be concerned about the high capital expenditures, Amazon’s position in AI and efforts to reduce reliance on Nvidia chips could lead to significant gains for the company.

Investors should consider Amazon’s potential in the AI space before buying stock. While the company’s free cash flow has been impacted by capital expenditures, its focus on AI infrastructure could lead to future growth. With a low valuation and strategic investments, Amazon remains an interesting option for investors looking ahead to 2026.

Read more at Nasdaq: This Might Be the Most Underrated Artificial Intelligence Stock to Own in 2026