Key Points
Lower energy prices should reduce Amazon's shipping and computing costs.
The cloud colossus's massive spending plan may have some overlooked benefits.
Shares of Amazon.com (NASDAQ: AMZN) climbed on Wednesday, following several positive developments.
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Energy prices pulled back
The U.S. and Iran agreed to a two-week ceasefire that will reportedly allow shipping through the Strait of Hormuz to resume. Roughly 20% of global oil and natural gas shipments flow through this vital waterway. Energy prices declined on the news as concerns about long-term supply disruptions eased.
Energy is a key input to Amazon's cost structure. Although the e-commerce giant is investing aggressively in electric vehicles (EVs), gasoline-powered vans and compressed natural gas (CNG)-fueled trucks still comprise a significant portion of its delivery fleet. These fuel prices thus have a direct impact on Amazon's shipping costs. When they fall, the online retail titan's profits rise.
Additionally, gas-fired power plants are a key source of electricity for Amazon's sprawling data center network. Lower natural gas prices could help to keep a lid on electricity prices. That, in turn, would help to preserve Amazon's increasingly important cloud computing profit margins.
Bullish analyst commentary
Amazon's stock likely also received a boost from positive remarks from BNP Paribas analyst Nick Jones.
Investors are overly concerned about Amazon's projected $200 billion in capital expenditures in 2026 -- and not fully appreciating the artificial intelligence (AI)-driven revenue gains this spending will enable, according to Jones.
Jones, in contrast, sees Amazon's share price rising approximately 45% to $320, fueled by a surge in AI-related computing demand.
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Joe Tenebruso has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
