The firm cited its analysis of the company's previous three large investment cycles. It revealed shareholders saw a 44 percent return, on average, if they bought Amazon when its trailing 12-month capital expenditure spending growth first increased, versus a much lower 12 percent return if they bought when investment spending growth decreased.
"While these stretches have often raised investor questions around long-term profitability, we find the historical relationship between accelerated investment periods and revenue reacceleration suggests the benefits to growth and margins should materialize over the course of the next 12-18 months," analyst Heath Terry wrote in a note to clients Monday. "Put simply, in a business that generates the high returns that Amazon has demonstrated … reinvesting in the business should ultimately pay off."
The bank reiterated its conviction list buy rating on Amazon shares, saying the company's current investment cycle will lead to better sales growth.