TLDR
- Amazon’s stock dropped 11% after hours following Q4 earnings miss and announcement of $200 billion capital expenditure plan for 2026
- The $200 billion capex forecast far exceeds analyst estimates of $146.6 billion and is significantly higher than Amazon’s $131 billion spending in 2025
- Amazon Web Services revenue grew 24% to $35.6 billion in Q4, marking the fastest growth in 13 quarters
- CEO Andy Jassy defended the spending, citing “very high demand” for AI compute and expressed confidence in strong returns on invested capital
- Tech sector selloff continues as investors grow concerned about massive AI infrastructure spending across Big Tech companies
Amazon stock took a beating in after-hours trading Thursday. Shares plunged more than 11% following the company’s fourth-quarter earnings report.
The earnings miss wasn’t the only problem. Amazon’s eye-popping capital expenditure forecast sent shockwaves through Wall Street.
The company plans to spend $200 billion in 2026. That’s $53 billion more than analysts expected and $69 billion above what Amazon spent in 2025.
This capex number towers over Alphabet’s already hefty $175 billion to $185 billion range. It’s also well ahead of Meta’s projected $115 billion to $135 billion spending plan.
The market’s message came through loud and clear. Investors are getting nervous about how much Big Tech is pouring into artificial intelligence infrastructure.
CEO Defends Massive Spending Push
CEO Andy Jassy faced tough questions from Wall Street analysts on the earnings call. They wanted to know when this spending would start paying off.
Jassy stood firm on his position. He said he was “confident” Amazon Web Services would see a “strong return on invested capital.”
“This isn’t some sort of quixotic, top-line grab,” Jassy told investors. He pointed to AWS’s track record of delivering solid returns on capital investments.
The CEO explained the spending is necessary to meet demand. Amazon’s AI compute services are experiencing “very high demand” that requires more data centers, chips, and networking equipment.
AWS added almost 4 gigawatts of computing capacity in 2025. The cloud unit expects to double that power by the end of 2027.
Cloud Business Shows Strong Growth
Amazon Web Services delivered solid results in the fourth quarter. Revenue grew 24% to $35.6 billion, beating analyst expectations.
Jassy called it AWS’s “fastest growth in 13 quarters.” The cloud business could have grown even faster with more capacity available.
“We are being incredibly scrappy around that,” Jassy said about meeting the demand constraints. The company is working to scale up its infrastructure as quickly as possible.
Evercore ISI analyst Mark Mahaney pressed Jassy on the spending confidence. He wanted specifics about what gives the CEO certainty about returns.
Jassy described the AI market as a “barbell.” On one end are AI labs consuming massive compute resources. On the other end are enterprises using AI for productivity and cost savings.
The middle section includes businesses building AI applications. Jassy believes this middle segment “very well may end up being the largest and most durable” part of the market.
Barclays analyst Ross Sandler raised concerns about the market being “top-heavy.” Right now, spending clusters around a few AI-native labs.
But Jassy sees the market expanding beyond just the big AI developers. More enterprises are starting to deploy AI tools across their operations.
The tech sector took a hit Thursday even before Amazon’s earnings. The Nasdaq Composite fell 1.59% as Nvidia, Oracle, and Qualcomm all declined.
High U.S. layoffs in January added to market pressure. The S&P 500 dropped 1.23%, slipping into negative territory for 2026.
Amazon’s massive capex follows similar announcements from other tech giants. Microsoft also saw its stock tumble after revealing elevated spending plans.
Some analysts see the selloff as overdone. Dan Ives of Wedbush Securities called concerns about an “Armageddon scenario” far from reality.
Others view the market reaction as healthy skepticism. Stephen Tuckwood of Modern Wealth Management said the decline shows “the market is discerning at this point rather than just irrational exuberance.”
Bitcoin also felt the pressure, briefly dropping below $61,000 Thursday evening. That marked its lowest level since November 2024, though it recovered to around $65,208.
Amazon’s capital expenditures in 2025 totaled roughly $131 billion. That was already up sharply from approximately $83 billion in 2024.
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