The $3 Trillion AI Stock I’d Dump Right Now – and What to Buy Instead
Hello, Reader.
In 1988, Alan Kulwicki – one of NASCAR’s ultimate underdogs – won the Checker 500 at Phoenix International Raceway. To celebrate his victory, he drove his car in the reverse direction of the race to wave directly at the fans.
Many drivers have performed this “Polish Victory Lap” (referencing Kulwicki’s heritage) in the decades since. It is a unique public celebration of success.
Amazon.com Inc. (AMZN) – while not a Wall Street underdog – just celebrated its own victory lap.
The company reported quarterly earnings and revenue that exceeded expectations – $1.97 in adjusted earnings per share and $200 billion in revenue. AWS revenue grew 37% from the same quarter one year ago.
Wall Street cheered Amazon’s results, and the stock jumped 15% to an all-time high.
This milestone pushed the company’s market valuation beyond $3 trillion, joining the ranks of Apple Inc. (AAPL), Microsoft Corp. (MSFT), Nvidia Corp. (NVDA), and Alphabet Inc. (GOOGL).
That’s a genuine achievement.
It’s also a double-edged sword.
There’s a downside to success, especially in the form of an earnings beat: The crowd immediately expects another, and that is getting increasingly harder to deliver.
So, in today’s Smart Money, I’d like to explain why, despite Amazon’s earnings beat, I’m not changing my “Sell” rating on the company – and why recent developments have only strengthened that view.
Then, I’ll let you in on another e-commerce company that deserves a spot in your portfolio.
Let’s jump in…
The $3 Trillion Illusion
Although Amazon beat expectations, its earnings weren’t as impressive as they first appeared.
About $53.4 billion of its $62.6 billion profit didn’t come from selling more products or growing its core businesses. Instead, it came mostly from an increase in the value of its Anthropic investment.
Meanwhile, the cost of staying in the AI race went up.
Amazon raised its full-year capital expenditure (CapEx) guidance to roughly $220 billion, up from $200 billion, citing rising memory costs. That means the company will need even bigger future profits to justify that spending.
Every dollar Amazon spends on AI raises expectations for what that spending needs to deliver. Investors aren’t just betting on Amazon’s current profits – they’re betting that its AI investments will create much bigger profits in the future.
The challenge is that Amazon now needs AI to generate enough returns to justify both its $220 billion spending plan and its $3 trillion valuation.
Amazon also isn’t running this race by itself. Big Tech is pouring billions into AI infrastructure. Each company is competing for the same customers, talent, and supply of advanced chips.
We’ve been tracking this AI spending race here at Smart Money. And as the stakes get higher, the margin for error gets smaller. A $3 trillion company has far less room for error than a $300 billion company. When expectations are this high, “good” results often aren’t good enough for long.
That is exactly what makes Amazon vulnerable. And why I continue to classify it as a “Sell.”
Even founder Jeff Bezos seems to be following the same track. One day after Amazon crossed the $3 trillion market cap mark, Bezos filed to sell around $4 billion of his own shares – roughly 15 million.
Now, to be fair, this wasn’t a snap decision. The plan was adopted back in November 2025, and Bezos has been steadily trimming his stake for years. He sold another 25 million shares for nearly $5.5 billion this past June.
But that’s exactly the point.
The man who used to be in the company’s driver’s seat hasn’t stopped selling. That suggests he doesn’t see unlimited upside from here.
Of course, this doesn’t mean Bezos expects Amazon to collapse. But it does reinforce a broader point: When expectations are this high and insiders are selling, investors should ask whether the easy gains are already in the rear-view mirror.
Victory laps are driven after the race is won. But for Amazon, the race isn’t over.
That’s why I’m looking elsewhere for opportunity. And I’ve found an e-commerce company growing even faster than Amazon in the world’s most connected economy…
Where the Real AI Money Is Moving
Even though this firm isn’t a household name here in the U.S., it is well known in every Korean household as the go-to provider of Amazon-like services.
I call it the “Amazon of South Korea.”
Projections are showing it could become 700% more profitable by 2027. And it already generates over $30 billion in revenue but trades at a tiny fraction of Amazon’s valuation.
It’s like finding Amazon in 2005, but with a bigger competitive advantage and stronger momentum.
I reveal the name of this recommendation free of charge in my Sell This, Buy That presentation.
Investors are beginning to recognize that the most lucrative AI opportunities often lie beyond the companies that drain their balance sheets to maintain their top position.
It’s why I’ve been recommending the overlooked stocks that are well-positioned to benefit in the AI era and why I’m avoiding the big players like Amazon.
As the major tech giants attempt to maintain their position in the AI race, click here to see the types of stocks I recommend you watch instead.
Regards,
Eric Fry
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