Missed Nvidia in 2009? This Rare Signal Is Flashing Again.\u00a0In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia.\u00a0For the first time in years, that same “Total Conviction” signal is flashing for a company 1\/100th the size of Nvidia.\u00a0Continue \u00bb<\/a> <\/p>\n Higher capex can cut into a company’s profit margins, but that isn’t the case if revenue growth outpaces capex growth. That has been the case for Amazon. In the second quarter, it delivered 20% year-over-year revenue growth, a result driven in large part by Amazon Web Services (AWS) hitting its\u00a0highest growth rate in more than four years. <\/p>\n Its cloud platform<\/a> has seen meaningful revenue growth acceleration as AI demand heats up. While investors certainly wish Amazon didn’t have to deal with rising memory chip costs, its expenditures are yielding tangible returns. <\/p>\n CEO Andy Jassy also touted how its AI and chips businesses have both exceeded $25 billion annual revenue run rates. Even with rising costs, operating income came to $27.5 billion in Q2, a 43.2% year-over-year increase. AWS did most of the lifting — its operating income surged from $10.2 billion in the prior-year period to $16.6 billion. <\/p>\n These numbers should continue to climb as Amazon expands its cloud capacity. If necessary, Amazon can also pass some of its costs onto customers. Furthermore, customers may have to upgrade their plans as their AI needs evolve. <\/p>\n High capital expenditures increase the barriers to entry for competitors <\/p>\n Although $220 billion is a lot of money to spend, it also highlights how difficult it is to compete with Amazon and its nearest peers. More than 60% of the cloud computing market is controlled by Amazon, Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). <\/p>\n Those three hyperscalers’ cloud platforms are heavily competing with each other. Other companies are also vying for market share, but they are mostly competing for scraps. Oracle (NYSE: ORCL) is in fourth place with a 4% market share, making it less than one-third the size of Google Cloud. <\/p>\n Amazon still has a comfortable lead over Microsoft and Google in the cloud industry. This type of insulation explains why AWS’ revenue and operating income have been surging amid the AI build-out. Only a small number of companies can fulfill enterprise demand, and AWS has emerged as the most reliable option. <\/p>\n Higher capex will reconfirm AWS’ leading position and widen the gap between competitors, essentially creating a triopoly between Amazon, Microsoft, and Google. That setup will give all three companies more pricing power as they continue to invest in cloud capacity. <\/p>\n Should you buy stock in Amazon right now? <\/p>\n Before you buy stock in\u00a0Amazon, consider this: <\/p>\n The Motley Fool\u00a0Stock Advisor\u00a0analyst team just identified what they believe are the\u00a010 best stocks<\/a>\u00a0for investors to buy now\u2026 and\u00a0Amazon\u00a0wasn’t one of them.\u00a0The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. <\/p>\n Consider when\u00a0Netflix\u00a0made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $429,223!*\u00a0Or\u00a0when\u00a0Nvidia\u00a0made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $1,317,883!* <\/p>\n That performance is why people listen. With a track record of\u00a0beating the S&P 500 by nearly 5x,\u00a0Stock Advisor\u00a0offers a distinct advantage. Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built for the long haul. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of August 24, 2026. <\/p>\n Marc Guberti<\/a> has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Oracle. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> Image source: Getty Images. Higher costs are translating into additional sales growth <\/p>\n