The analysis centers on Amazon's strategic capital allocation, particularly in its AWS segment. Capital expenditures (CapEx) for the trailing twelve months have surged to $120.1 billion, representing a significant increase from $52.7 billion in Q4 2023. Despite this, AWS's remaining performance obligations (RPO) have grown modestly from $177 billion to $200 billion annually, contrasting with the more aggressive CapEx expansion. However, AWS net sales demonstrated accelerated year-over-year growth, climbing from 17% to 20%, accompanied by an improved operating margin from 32.9% to 34.6%. This indicates organic demand, with Amazon noting potential for further revenue if capacity were not a constraint. The company is investing in custom AI silicon, including Trainium 3 Ultra and upcoming Trainium 4 chips, to enhance compute performance and reduce dependence on external providers. Amazon's return on invested capital (ROIC) has risen to 18.2% and is projected to approach 30% over the next decade. A substantial portion of recent investments, approximately 75% in the last quarter, is directed towards AWS, which is significantly more profitable than other segments. This strategic shift in asset structure, moving towards higher-margin operations, is expected to boost Amazon's overall profitability. The analyst acknowledges potential risks of overinvestment leading to future gluts but considers demand for AWS services to currently exceed supply. Based on a discounted cash flow valuation, Amazon's intrinsic value is calculated at $270.49, against a current market price of $232.62, suggesting undervaluation and a bullish outlook for the stock over a multi-year horizon.