Here’s what I found for you.
Operating cash flow rose 12%, but capital spending rose 87%. I built a model to see how much the answer changes if spending stays high.
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Valuation, earnings quality, and balance-sheet strengthChecking the assumptions behind PANW
Growth expectations and what the valuation requiresDemo only · Text delivery and portfolio conversation are not connected.
AMZN · Cash flow and valuation
Amazon’s investment spending explains the decline in free cash flow. The next question is what those investments will earn.
Cash from operations increased $13.2B. Net cash capex increased $48.0B. The difference explains the $34.8B decline in free cash flow.
How much spending supports growth, how much is recurring, and whether the new capacity will produce attractive returns.
Hold the revenue path constant. Change capital spending. See how much the valuation depends on cash generation improving.
Reported TTM figures through June 30, 2025. Model assumptions are illustrative.
| Operating forecast | 2026E | 2027E | 2028E | 2029E | 2030E |
|---|
Starting revenue: $700B. Revenue growth: 10%, 9%, 8%, 7%, and 6%. Operating margins: 13% to 17%. Tax: 21%. Depreciation: 8% of revenue. Incremental working capital: 1% of revenue growth. Capex falls from 15% to 11% of revenue in the first scenario and stays at 15% in the second.
All forecast inputs, cash, debt, and share count are illustrative. This demonstration is not Amazon guidance or a current price target.
July 31, 2025 · Original release
Quarter ended June 30, 2025 · Original filing
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I’m less interested in next quarter’s spending than what the new capacity can earn. What evidence would convince you either way?
marginofsafety
I’d separate replacement spending from expansion before treating the whole increase as an investment in growth.
compounding
Agreed. I’d also want evidence of utilization improving, not just revenue growth.
The number of tickers doesn’t tell me how diversified I really am. I’m trying to understand the businesses underneath the fund.
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