Amazon didn't impress the market with the report and announced $200 billion in spending. The stock plummeted

Amazon shares fell more than 10% in extended trading on Thursday, February 5, after the company reported mixed results for the fourth quarter and raised its 2026 capital expenditure forecast to $200 billion. That's a quarter more than the market expected. Amazon remains the market leader in cloud infrastructure and is trying to show it is not losing ground to players like Google and Microsoft, CNBC noted.

Following Google and Meta, Amazon, the owner of the AWS cloud service, reported an increase in capital expenditures in 2026. The company explained that it expects further increases in spending as it aggressively invests in data centers and other infrastructure to meet the surge in demand related to artificial intelligence.

"With such strong demand for our current products and fundamental growth areas - such as AI, chips, robotics and low-Earth orbit satellites - we expect Amazon's capital expenditures in 2026 to be approximately $200 billion, and we expect high long-term returns on invested capital," the statement said.

Analysts expected Amazon's spending to be around $150 billion, Bloomberg points out . In 2025, the company spent about $130 billion.

Rising capex has raised investor concerns that Amazon's colossal bet on artificial intelligence could hit profits before those investments begin to pay off, the agency wrote. In extended trading after the reports were published, Amazon's securities collapsed 10% to $201. The main session on Thursday, the shares ended with a decline of 4.4% - amid a general sell-off in the technology sector.

Amazon's revenue in the last quarter of 2025 increased by 13.6% compared to the same period of 2024 and reached $213.39 billion against expected $211.33 billion, CNBC points out. At the same time, adjusted earnings per share fell short of the consensus: it amounted to $1.95 with the average Wall Street estimate of $1.97.

Revenue from Amazon Web Services, Amazon's cloud division, which generates the bulk of the company's profits, rose 24% to $35.6 billion, the highest quarterly growth in more than three years, according to the report. Analysts, according to StreetAccount, had forecast $34.93 billion, CNBC writes.

Amazon's advertising division generated $21.32 billion in revenue, while the market was expecting $21.16 billion.

For the current quarter, Amazon is forecasting revenue in the range of $173.5 billion to $178.5 billion, representing growth of 11-15%. Analysts surveyed by LSEG were expecting $175.6 billion, CNBC reported. The company estimated operating profit would be between $16.5 billion and $21.5 billion, while Wall Street on average was hoping for $22.2 billion. Bloomberg attributes the low operating profit forecast to just the pressure from rising capex.

Amazon employed 1.57 million people worldwide at the end of December, up 1% from a year earlier, the company said. The bulk of that is warehouse staff. Last week, Amazon announced plans to lay off about 16,000 corporate employees after cutting about 14,000 in October.

While Amazon remains the market leader in cloud infrastructure, the company is trying to show that it's not losing ground to Google and Microsoft, CNBC notes. Last week, Microsoft reported a 39% increase in Azure revenue, while Google's cloud division brought in 48% more - the highest since 2021.

Alphabet and Meta Platforms have announced that they plan to invest much more in infrastructure expansion this year than analysts admitted. Alphabet's capex will be between $175 billion and $185 billion, while Meta's investments could reach between $115 billion and $135 billion. Microsoft did not disclose its spending plans, but revealed in its latest report that it exceeded its capex in the previous quarter by 66%, which also led to a collapse in its shares.

"The market's negative reaction to Amazon's capex growth is because it was more significant than AWS's revenue growth," DA Davidson analyst Gil Luria told Bloomberg. As with Microsoft, investors are concerned that investments are growing faster than the returns on them and that Amazon, Google and Microsoft are embroiled in an escalating infrastructure expansion competition that may not pay off for everyone."

This article was AI-translated and verified by a human editor