TLDR
- Amazon Web Services revenue hit $35.58 billion in Q4, beating analyst estimates of $34.93 billion with 24% growth.
- AWS operating income reached $12.47 billion with margins improving to 35%, but parent company Amazon missed EPS expectations at $1.95 versus $1.97 expected.
- Amazon stock dropped 10% after announcing $200 billion capital spending guidance for 2026, far exceeding Wall Street’s $148.86 billion estimate.
- CEO Andy Jassy said the company plans to double cloud computing capacity again by end of 2027, with most spending focused on AI infrastructure.
- Amazon announced 16,000 corporate job cuts last month while Q1 2026 revenue guidance came in at $173.5-$178.5 billion versus $175.6 billion consensus.
Amazon stock tumbled as much as 10% after the company reported fourth quarter earnings Thursday evening. The drop came despite strong cloud business performance.
BREAKING: Amazon stock, $AMZN, falls -10% after reporting Q4 2025 earnings.
It's now down -15% on the day including its regular hours move. pic.twitter.com/pkzYdSS9No
— The Kobeissi Letter (@KobeissiLetter) February 5, 2026
The sell-off centered on massive capital spending plans that caught Wall Street off guard. Amazon guided for $200 billion in capital expenditures for 2026, far above the $148.86 billion analysts expected.
Amazon reported adjusted earnings per share of $1.95 for the December quarter. That missed the Wall Street consensus estimate of $1.97 according to FactSet.
Revenue came in at $213.4 billion. That beat analyst expectations of $211.4 billion.
The company’s cloud unit delivered the strongest numbers of the report. Amazon Web Services generated $35.58 billion in revenue, topping the $34.93 billion estimate.
AWS revenue grew almost 24% year-over-year. The unit represented about 17% of Amazon’s total revenue for the quarter.
Cloud Unit Drives Profitability
Operating income within AWS reached $12.47 billion. That exceeded the StreetAccount consensus of $11.91 billion and accounted for most of Amazon’s total profits.
AWS operating margins improved to 35% from 34.6% in the third quarter. The cloud unit continues to be Amazon’s profit engine.
CEO Andy Jassy emphasized the company’s AI infrastructure buildout on the earnings call. AWS added almost 4 gigawatts of computing capacity in 2025, double what it had in 2022.
“We expect to double it again by the end of ’27,” Jassy said. The capacity expansion reflects surging demand for AI workloads.
Spending Surge Raises Profit Concerns
The $200 billion capital expenditure guidance dominated investor concerns. Most of the spending will go toward AI infrastructure in AWS, Jassy explained.
“We just have a lot of growth, a lot of demand,” Jassy said on the call. He added that some spending will support faster-than-expected growth in core non-AI workloads.
Jassy expressed confidence in returns from the investment. “I’m very confident we’re going to have strong return on invested capital here,” he said.
Amazon faces growing competition in the cloud AI race. Google Cloud reported 48% revenue growth, its fastest since 2021. Microsoft’s Azure and cloud services expanded 39%.
Amazon’s first quarter revenue guidance came in at $173.5 billion to $178.5 billion. The midpoint sits slightly below the $175.6 billion analyst estimate.
The company announced plans to cut 16,000 corporate jobs last month, citing the need to remove management layers and reduce bureaucracy.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
