KEY TAKEAWAYS
- Amazon.com Inc. (NASDAQ: AMZN) shares dropped more than 10% in extended trading after reporting a Q4 earnings per share miss and announcing a $200 billion capital expenditure forecast, well above analyst expectations.
- The increased spending is primarily allocated to Amazon Web Services (AWS) infrastructure to handle rising demand for cloud computing and artificial intelligence workloads.
- Competitors including Microsoft Corp. (NASDAQ: MSFT), Alphabet Inc. (NASDAQ: GOOGL), and Meta Platforms Inc. (NASDAQ: META) have also disclosed aggressive spending plans, intensifying investor focus on cash flow and returns.
Amazon.com Inc. (NASDAQ: AMZN) reported mixed fourth-quarter results, triggering a sharp decline in after-hours trading as investors digested a higher-than-expected capital expenditure forecast. According to the company’s Q4 earnings report filed with the U.S. Securities and Exchange Commission, Amazon posted revenue that exceeded analyst estimates compiled by LSEG, while earnings per share slightly missed expectations. CEO Andy Jassy emphasized during the earnings call that elevated spending is aimed at meeting demand for cloud computing and artificial intelligence workloads, including deployments at the recently opened Project Rainier, an $11 billion AI-focused data center designed to handle workloads from Anthropic.
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Within the first hour of extended trading, Amazon shares fell more than 10%, reflecting market concern over the scale of planned investment and near-term financial impact, despite continued revenue growth in cloud and advertising operations.
Financial Performance and Capital Expenditure Plans
Amazon reported Q4 revenue of $213.39 billion, exceeding the $211.33 billion consensus estimate from analysts surveyed by LSEG. Earnings per share were $1.95, narrowly below the $1.97 estimate. Net income for the quarter rose to $21.19 billion, compared with $20 billion in the same period in 2025.
AWS revenue reached $35.58 billion, surpassing the $34.93 billion StreetAccount estimate, and expanded 24% year over year, marking the fastest growth rate for the segment in 13 quarters. Advertising revenue grew 23% year over year to $21.32 billion, exceeding the $21.16 billion estimate.
For Q1 2026, Amazon projected revenue between $173.5 billion and $178.5 billion, implying growth of 11% to 15%, in line with analysts’ expectations of $175.6 billion.
The company also projected capital expenditures of approximately $200 billion for 2026, up from $131 billion in 2025 and well above the $146.6 billion forecast compiled by FactSet. According to statements during the earnings call, most of this spending will go toward AWS infrastructure, including data centers, AI servers, robotics, and satellite projects. Jassy noted that demand for both AI and non-AI workloads is exceeding internal expectations, and the company is installing capacity as quickly as possible to monetize usage.
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Workforce Adjustments and Competitive Context
Amazon confirmed plans to reduce approximately 16,000 corporate roles, following prior cuts of 14,000 positions in October 2025. As of December 31, 2025, Amazon employed 1.57 million people globally, up 1% year over year, largely due to warehouse and logistics staffing.
In the competitive cloud sector, Microsoft Corp. (NASDAQ: MSFT) recorded 39% growth in Azure, while Alphabet Inc. (NASDAQ: GOOGL) reported 48% growth in Google Cloud, its fastest pace since 2021. Capital spending escalation is not unique to Amazon; Alphabet projected $175 billion to $185 billion, and Meta Platforms Inc. (NASDAQ: META) forecasted $115 billion to $135 billion, reflecting an industry-wide acceleration in AI and cloud infrastructure investment.
From a strategic analysis standpoint, Amazon’s disclosures underscore a deliberate emphasis on large-scale infrastructure deployment to meet AI and cloud demand. Market reaction focused on near-term financial implications of the $200 billion capital expenditure, while peer company performance highlights growing scrutiny on return on invested capital, cash flow sustainability, and execution risk across major technology firms.