Amazon (NASDAQ: AMZN) stock has shot up over the last week with the company’s annual letter to shareholders, posted last Thursday (9 April), reigniting investor interest.

In it, CEO Andy Jassy made it clear that Amazon still has a ton of growth potential. Not only is the company seeing strong demand for its cloud computing and AI solutions but it’s also seeing high demand for its space satellite services. With that in mind, I think SpaceX isn’t the only game in town for those interested in what happens beyond the stratosphere.

The AI opportunity for Amazon

I’d advise anyone who owns Amazon stock, or is thinking about buying it, to read the annual letter, because it provided some powerful insights into the company’s roadmap.

On the AI front, Jassy explained why the company is spending $200m this year, noting that it’s not being invested on a hunch. Ultimately, the group expects to monetise this capex in 2027-2028 and is willing to endure short-term free cash flow headwinds for the substantial medium-to-long-term opportunity.

Jassy added that he’s followed the public debate on whether AI is over-hyped, whether it’s a bubble, and if margins and return on invested capital will be appealing. His views are no, no, and yes.

“AI is a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger. We’re not going to be conservative in how we play this – we’re investing to be the meaningful leader, and our future business, operating income, and FCF will be much larger because of it.”
Amazon CEO Andy Jassy

Perhaps the most interesting segment of the AI discussion was the section on chips. Jassy said this area of the business is “on fire“, and will be “much larger than most think”.

The chips business has an annual revenue run rate of over $20bn, and it’s growing in triple-digits year on year. Jassy said if chips was a standalone business with products sold to other parties, the annual run rate would be closer to $50bn.

“There’s so much demand for our chips that it’s quite possible we’ll sell racks of them to third parties in the future.”
Amazon CEO Andy Jassy

Space revenues coming

Looking beyond AI, another really interesting area of focus was space. Here, Jassy explained that the company has built a low Earth orbit satellite network (Amazon Leo) with more than 200 satellites. This makes it the third-largest low Earth orbit network in operation today behind SpaceX and Eutelsat OneWeb.

This service – which is expected to see a few thousand more satellites added in the years ahead – is officially scheduled to launch in mid-2026. However, already the company has meaningful revenue commitments from enterprises and governments such as Delta Airlines, NASA, and Vodafone.

An investment opportunity?

There’s clearly a lot to be excited about as an investor, especially as it trades on a price-to-earnings (P/E) ratio of just 25 using next year’s earnings forecast (SpaceX looks like it may trade at 130 times sales).

There are significant risks, of course. These include major competition from the other cloud computing companies, a slowdown in consumer spending that’s an ever-present issue for Amazon, and general market weakness.

Taking a five-year view though, I see huge potential. I’ve made Amazon my largest holding and I think it’s worth considering.