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Amazon shares slumped as much as 10 per cent on Thursday after it announced plans to spend $200bn on capital expenditure in 2026, roughly a third more than Wall Street had forecast, as it increases its bet on AI.
The Seattle-based tech giant said capex would climb more than 50 per cent from nearly $130bn in 2025, having ploughed cash into building data centre infrastructure this year. Analysts had expected about $150bn in capex for 2026.
Andy Jassy, Amazon’s chief executive, said: “With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics and low Earth orbit satellites, we . . . anticipate strong long-term return on invested capital.”
Investors were spooked by the commitment, which exceeds rivals including Google and Microsoft. Amazon stock fell as much as 10 per cent in after-hours trading in New York.
Huge increases in capital spending from Big Tech groups this week have rattled the US stock market, alongside jitters around the impact of memory chip shortages on chipmakers and the hit to software stocks from new AI workplace and coding tools.
Amazon’s earnings and forward guidance were broadly weaker than expected, though its cloud unit posted strong growth.
Net income for the group — spanning advertising, ecommerce and media — came in at $21.2bn for the quarter, roughly in line with the previous quarter. Revenues increased 14 per cent to $213.4bn.
Sales at Amazon Web Services, the company’s cloud division, rose 24 per cent to $35.6bn in the fourth quarter from the year before, ahead of Wall Street expectations.
AWS, which rents servers to businesses to run online services, has been the focus of investors’ attention as Amazon pours money into the AI race against cloud rivals. It has lagged behind peers in developing popular frontier models and has been playing catch-up to sign large computing contracts.
Amazon forecast revenues for the first quarter would fall between $173.5bn and $178.5bn, with the midpoint slightly above analysts’ estimates. The group said its profits would come in weaker than expected.
The ecommerce giant has slashed tens of thousands of white-collar jobs in an attempt to reduce costs.
Amazon said capital expenditure for the fourth quarter came in at about $38bn. The spending was above analysts’ estimates of $33.6bn, according to S&P Visible Alpha.
Amazon’s retail unit was broadly in line with Wall Street expectations, with revenue of $141.7bn during the period ending December 31, which included the busy holiday time.
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