About 80% of Amazon's 2026 capex spending likely AI-related: Deepwater's Munster

Summary

Gene Munster of Deepwater Asset Management discusses Amazon's 2026 capex outlook, saying roughly 80% of the spending is likely AI-related. He argues the market's negative reaction to large hyperscaler capex may be misplaced if Amazon, Google, and Meta can earn returns on AI. He sees the AI buildout as still early, with continued heavy spending into 2027, benefiting infrastructure while disrupting software and other sectors.

• Amazon's 2026 capex guidance of about $200 billion is in focus after earnings.
• Munster estimates roughly 80% of that spending is AI-related.
• He says big capex numbers reflect hyperscaler conviction in AI and prior ROI from Amazon, Google, and Meta.
• He argues if management teams are competent, the selloff in capex-heavy stocks may be overdone.
• Munster expects AI capex to continue at huge levels in 2027 even if growth rates slow.
• He sees AI still in early innings and expects disruption to extend beyond software.
• AI capex should resonate for infrastructure investors and create pressure on software profit pools.