Amazon Secures Critical Copper Supply Amid Strategic Pivot

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Amazon is making decisive moves to lock down the raw materials essential for its artificial intelligence infrastructure, even as it takes a significant write-down in its retail investments. This strategic shift in priorities is being closely watched by the market.

In a bid to prevent future supply bottlenecks, Amazon Web Services (AWS) has secured a direct supply of a crucial industrial metal. The cloud computing division has entered into a two-year agreement with mining giant Rio Tinto for approximately 14,000 tons of copper cathodes to be delivered over four years. This copper, sourced from the Johnson Camp Mine in Arizona, will be used in the physical components of AI data centers, including wiring, transformers, and cooling systems.

A notable aspect of this deal is the production method. Rio Tinto employs a bioleaching technology, which uses microorganisms to extract copper from lower-grade ore. This operation represents the first new source of copper in the United States in over a decade. As part of the partnership, AWS will provide cloud analytics to help optimize the mining operations. This vertical integration strategy addresses a looming constraint: the rapidly escalating copper demand from hyperscale data centers powering the AI revolution.

European Cloud Launch and Regulatory Strategy

Coinciding with its supply chain efforts, AWS activated its "European Sovereign Cloud" over the weekend. This new cloud region is physically and logically separated from the global AWS network and will be operated exclusively by EU residents. Amazon has committed to investing more than €7.8 billion in Germany for this initiative.

The launch is a direct response to regulatory pressures, particularly concerns related to the U.S. CLOUD Act. By establishing this sovereign infrastructure, Amazon aims to capture business from highly regulated industries and the public sector within the European Union, including sensitive government contracts.

Retail Investment Write-Down

On a less positive note, Amazon has declared a substantial financial loss in its retail portfolio. The company has classified its $475 million investment in Saks Global as "likely worthless." The luxury retailer has filed for Chapter 11 bankruptcy protection. Amazon acquired the preferred shares in 2024 as part of the $2.7 billion acquisition of Neiman Marcus.

In court documents filed on Friday, Amazon delivered sharp criticism, alleging that Saks had burned through hundreds of millions of dollars and missed budget targets within a twelve-month period. Although a federal judge has approved an initial $400 million in rescue financing, Amazon has threatened to pursue "drastic legal measures" over alleged capital mismanagement.

Market Reaction and Analyst Outlook

The market's response to these developments appears clear. Amazon shares closed the week at $239.12, giving the company a market capitalization of approximately $2.56 trillion. Analysts are focusing on the long-term value creation from secured supply chains. Firms like TD Cowen have recently raised their price targets for Amazon to $315, suggesting the market has already accounted for the retail write-down while rewarding the strategic focus on foundational AI infrastructure.