TL;DR
The Big Idea: Amazon Earnings Report Coverage - Amazon is transforming into a vertically integrated utility, betting $200B that its AI infrastructure and "vertical" shopping intelligence will outrun the "horizontal" hype of ChatGPT.
This Week in the Watson Weekly eCommerce Digest - Rick Watson’s Keynote from NRF 2026: The Goliath Paradox
Big Tech Capex Projections - The "Four Horsemen" are placing a $650B bet on the future, building a privately-owned "AI Grid" that makes the cost of entry impossible for anyone else.
What We’re Watching This Week
Shopify (February 11, Pre-market): Watching European and POS growth.
The Trade Desk (February 11, Pre-market): The open internet’s last stand via UID2.
Pinterest (February 12, After-hours): The "show-me" metric for lower-funnel conversion.
TOP NEWS OF THE WEEK
THE BIG IDEA: AMAZON EARNINGS REPORT COVERAGE
Amazon Is A Vertically-Integrated Utility
Retail is just another use case at Amazon now. What blew me away most from the earnings call is not just the $200B investment (compared to $175B from Google) in new AI-powered datacenters. It's the growth rate. Combined with its efforts to build chips, Amazon is looking to be the electricity powering the AI revolution.
Starting with AWS, I mean ... AI-WS
It's significant that Amazon starts its earnings calls speaking about its datacenter business. Here are a few eye-watering stats you just don't see normally:
AWS growing 24% y/y with an annualized run rate of $142B. (Fastest growth in 13 quarters).
AWS revenue backlog is now $244B, up 40% year over year and 22% quarter-over-quarter.
Jassy says the AI market is in a "barbell effect" right now. There are a few runaway applications (likely he means things like Claude Code), not much in traditional Enterprise loads yet, and at the other end, Enterprises using AI to eliminate costs.
The mic-drop 🎤 moment on the call was when Andy Jassy said this:
"I think this is an extraordinarily unusual opportunity to forever change the size of AWS and Amazon as a whole."
And this is from the same company that doubled its logistics network during COVID, built the Kindle and Alexa, invented an entirely new datacenter category, and is launching low-earth-orbit satellites.
What About the Chips?
Amazon's chips business is also largely discounted by the market. They have multiple billion-dollar businesses already on a tear:
The entire chips business is over a $10B run rate.
Graviton is a multibillion-dollar run rate business, growing 50% year over year.
Is it any wonder why they are promising these CapEx numbers?
...About that $200B Capex Number
The most controversial thing in the stock market this last week is the investment in datacenters from Google and Amazon. Amazon has thrown down a gauntlet: we will not be outspent in AI datacenters. Period. End of discussion.
Personally, I don't think it's an accident that the company has a $244B revenue backlog while it's investing $200B in new datacenters. 22% quarter-over-quarter growth in revenue backlog is hard to fathom at Amazon scale.
From where I sit, Amazon is making a prudent investment in its future, and I have no doubt that Jeff Bezos would be doing the exact same thing. Yes, Jeff—the same guy who said that perhaps Amazon is not for you if, you know, you expect them to make money. Amazon will always invest first and then look for ways to make money later. Always.
In my mind, Amazon would be dumb not to invest this much. Amazon is now the power plant of the AI revolution.
Amazon Rufus vs OpenAI ChatGPT vs Google Gemini for Shopping
One of the most interesting parts of the earnings call was Andy Jassy speaking about "horizontal AI" versus "vertical AI" for shopping use cases. Simply put, Amazon has two assets that no one else has: first, a lifetime of buyer history, and second, that pesky flywheel.
In short, Amazon feels that while horizontal AI like ChatGPT will be great at collecting supply, it will not be the best place to shop because selection is only one part of the equation.
Jassy makes a good point. How many times over the years has someone told you: "Amazon's problem is they are good at spear-fishing and not discovery. We are going to defeat Amazon by being the place to discover." You saw it with Shopify’s new Shop App announcement: beautiful UI that no one will visit. Great work, folks.
eCommerce is still largely a supply chain exercise. When will people get it through their friggin' heads? Supply chain excellence is the gas which powers the Amazon retail flywheel, and forever shall it be.
Sellers Still Showing Up
Did we forget about the marketplace? Not here at the Watson Weekly. Marketplace is still foundational:
Worldwide third-party seller units reached 61% of total paid units in Q4 2025.
Seller services revenue rose 11.2% year over year, exceeding analyst expectations.
Over 400 new brands, including Nike and North Face, have deepened their presence on the marketplace in 2025.
You might yawn, but this is still impressive.
Ads Business Still Growing
The ads business, of course, is getting short coverage, but there is a lot to be excited about here, too:
$21.3B revenue in the quarter, growing 22% year over year.
Prime Video’s ad-supported audience has expanded significantly to 315M globally, up from 200M users in early 2024.
Continuing to invest in AI tools to allow brands to generate and deploy ads in minutes instead of days.
The Forgotten Stores Business
Forgive yourself if you forgot Amazon actually sells stuff.
10% growth year over year. Up from 8% in prior quarters, and of course, it's Q4.
In 2025, Everyday Essentials grew 2x as fast as every other category. At this rate, could Amazon be on a path to become America's largest grocer?
Everyday Essentials is now one out of every 3 units. Keep this 33% number in mind—grocery is approximately 60% of Walmart’s sales.
Is it fair to wonder if Amazon could become America's largest grocer, even after all its missteps? If this doesn't speak to the power of supply chain in retail, I don't know what does. Speaking of supply chain...
The Supply Chain Revolution Will Be Televised
Amazon's supply chain continues to outperform, proving perhaps that at this point, "any monkey can drive this train" (shout out to Meg Whitman), or that at least Dave Clark was not required. Here are a few interesting tidbits I took:
Amazon delivered 70% more same-day items compared to last year.
Amazon launched a new feature, "Add to Delivery," which injects a new item into an order already in flight. This is already 10% of all Amazon Prime volume each week.
Amazon added another 2 delivery zones to its network, totaling 10 regionalized zones in North America.
THE BOTTOM LINE
Amazon is making smart bets. It's betting the house on AI and infrastructure. In an era where everyone is talking about AI, Amazon is the one building the factory, the chips, and the interface. Watch the "Leo" satellite progress in 2026—it’s the next big frontier.
THIS WEEK IN THE WATSON WEEKLY ECOMMERCE DIGEST
The Watson Weekly podcast, sponsored by Rithum, presents the keynote speech delivered in New York City on Sunday, January 11th, prior to the National Retail Federation Big Show. The. Watson Weekend Live at NRF Presented by Radial, keynote speech focused on "being bold in 2026.”
THE TRUTH ABOUT LAST WEEK: BIG TECH CAPEX PROJECTIONS
This past week, the "Four Horsemen" of tech—Amazon, Meta, Alphabet, and Microsoft—didn't just announce earnings; they announced a $650B bet on the future.
The Numbers That Broke the Calculator
Amazon’s $200 billion capex projection for 2026 is the one that really sucked the air out of the room. When Andy Jassy tells you he’s spending more than the entire GDP of some European nations, you have to ask: Is this smart, or is it a defensive sprint?
Here is how I’m looking at it:
The AI "Tax": This isn't optional. In the world of cloud (AWS, Azure, GCP), if you don't have the GPUs, you don't have the customers.
The Revenue Lag: Wall Street is throwing a tantrum because they see the "bill" now but the "paycheck" later. Amazon’s 24% AWS growth is solid, but it’s not yet $200-billion-a-year solid.
The Moat Building: This is a classic "winner-takes-most" play. They are making the cost of entry so high that no one else can even get in the game.
Is It Smart? In the short term, it’s painful. But if you’re a long-term operator, you realize these companies are building the utility grid of the next century.
Is there a risk of overcapacity? Absolutely. But for these giants, the risk of being second is far more expensive than the risk of being early. They’re betting that AI isn’t just a feature—it’s the new operating system for all of commerce.
WHY IT MATTERS
This $650 billion bet signals the birth of a privately-owned "AI Grid," transforming these four giants into the permanent utility providers of the next century by making the cost of entry impossible for anyone else.
WEEKLY LOOKAHEAD
WHAT WE’RE WATCHING THIS WEEK
The Weekly Take: Commerce Ecosystem on Trial
Next week is a massive gut-check for the modern commerce stack. We’ve moved past the "growth at all costs" era, and now the market wants to see who actually owns the customer journey.
The Lineup:
Shopify (February 11, Pre-market): Are they still the "un-Amazon" or are they embracing our corporate overlords now? Still, the real story for me is European and POS growth which has been on a tear.
The Trade Desk (February 11, Pre-market): The open internet’s last stand. With signal loss everywhere, TTD’s UID2 strategy is the only thing keeping programmatic relevant. Retail media is the tailwind here.
Pinterest (February 12, After-hours): It’s no longer just a mood board; it’s a full-funnel, err.. experiment. Their partnership with Amazon and Google is the "show-me" metric for lower-funnel conversion.
NEWS WE’RE LOVING
Once Upon an IPO: Jennifer Garner's organic kids snack brand, Once Upon a Farm, raises nearly $198M in IPO.
Ollie Has A New Owner: Fresh dog food brand Ollie has been acquired by a Spanish conglomerate, Agrolimen.
Cosmetics Meet Sam: Coty has announced a partnership with OpenAI.
WATSON IN THE WILD
Highlights and sizzle from our latest NRF 2026 Watson Weekend Live! event on January 11, 2026, presented by Radial: What is Important in 2026?
SCAYLE: The Most Honest eCommerce Debate of the Year - Watch the Debates.
UPCOMING EVENTS
Shoptalk 2026: Join us for the Watson Live! — Agentic Debate Series Lunch at Shoptalk Las Vegas 2026 - Register Now. Another debate? Come see what craziness we have cooking up for you at Shoptalk.