Despite concerns over Amazon Inc. (NASDAQ:AMZN) investing heavily in AI, BNP Paribas analyst Nick Jones believes the company is poised to meet the growing cloud demand.
Jones, in a note released on Tuesday, said “concerns are overdone,” and argued that Amazon’s increased spending is “appropriate and necessary given demand levels and the size of the future opportunity,” reported Market Watch.
He emphasized the company’s accelerating backlog growth and noted that Amazon and other hyperscalers like Google (NASDAQ:GOOGL) (NASDAQ:GOOG) are constructing data centers in line with the surge in contracted demand.
Jones advised investors to focus on the backlog-to-capex ratio, which compares contracted demand to infrastructure spending, rather than total spending. Jones believes that with a robust backlog, Amazon can instantly convert available capacity into revenue.
Jones also pointed to rising revenue per employee at Amazon, interpreting it as evidence of productivity gains as firms shift from physical to digital labor while expanding AI and cloud operations. Amazon’s revenue per employee has risen from …
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