Here are Updates on Amazon’s (AMZN) Rational FCF Reinvestment

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Soumya Eswaran

Fri, July 17, 2026 astatine 9:08 AM CDT 4 min read

Wedgewood Partners, an concern absorption company, released its first-quarter 2026 capitalist letter. A transcript of the missive tin beryllium downloaded here. Wedgewood Composite delivered a nett instrumentality of 9.4% successful the 2nd 4th compared to 15.2% for the Standard & Poor's 500 Index, 16.7% for the Russell 1000 Growth Index, and 13.9% for the Russell 1000 Value Index. The steadfast is optimistic astir the semipermanent maturation of hyperscalers and has accrued its investments successful this sector, citing their important net imaginable and important relation successful AI adoption. Capital has besides been redirected towards exertion hardware stocks, particularly semiconductors, which present marque up a larger stock of the S&P 500 Index. Semiconductor stocks person benefited from hyperscalers' spending, but the steadfast expresses caution astir cyclical hazard and volatility. However, the momentum-driven marketplace negatively affected the Wedgewood fund's high-quality stocks, starring to a 25% instrumentality implicit the past 15 months, importantly underperforming the 90% summation of the S&P 500 Momentum ETF (SPMO). In addition, delight cheque the Fund's apical 5 holdings to cognize its champion picks successful 2026.

In its Q2 2026 capitalist letter, Wedgewood Partners highlighted Amazon.com, Inc. (NASDAQ:AMZN). Amazon.com, Inc. (NASDAQ:AMZN) is simply a multinational exertion and retail institution known for its starring online marketplace and unreality platform. On July 16, 2026, Amazon.com, Inc. (NASDAQ:AMZN) closed astatine $249.89 per share. One-month instrumentality of Amazon.com, Inc. (NASDAQ:AMZN) was 2.25%, and its shares gained 10.51% implicit the past 52 weeks. Amazon.com, Inc. (NASDAQ:AMZN) has a marketplace capitalization of $2.69 trillion.

Wedgewood Partners stated the pursuing regarding Amazon.com, Inc. (NASDAQ:AMZN) successful its Q2 2026 capitalist update:

"Although Microsoft, Amazon.com, Inc. (NASDAQ:AMZN), and Meta person antithetic concern models and were not needfully apical drivers of show during the quarter, we presumption their concern accidental set, from some a compounding and returns position and a component-cost hedge perspective, arsenic akin to Alphabet's.

As we person noted before, Amazon is different subordinate of this elite radical generating precocious returns, and we deliberation it is being rather rational by rapidly compounding its plus basal astatine these returns. During the quarter, Amazon grew gross by 17% and operating income by 30%. While the bears proceed to kick astir Amazon's $200 cardinal successful capex maturation and dwindling escaped currency flow, we estimation this incremental capex volition summation the 2025 full plus basal by astir 28%. With 30% currency travel maturation connected what we presume is astatine slightest 28% plus growth, we reason Amazon is achieving astatine slightest arsenic good, if not better, returns connected superior than it has antecedently - yet the banal is trading adjacent historically depressed multiples. This is different telltale motion to america that the Company's assertive escaped currency travel reinvestment is precise rational and that the depressed valuation presents an fantabulous semipermanent concern accidental for us. Moreover, we estimation the Company's concern successful Anthropic is worthy astatine slightest $100 cardinal and, if realized, volition service arsenic different effectual hedge against commodity representation terms inflation, particularly successful DRAM, implicit the adjacent fewer years. That should beryllium agelong capable to offset ostentation until much DRAM capableness comes online to mean prices."

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