A record performance from its cloud division was not enough to soothe Wall Street’s nerves. Amazon’s fourth-quarter revenue surpassed expectations, but a single staggering figure has dominated the conversation: $200 billion. This is the amount the tech behemoth plans to invest in capital expenditures (capex) by 2026, a forecast that caught investors off guard and triggered a sell-off in the company’s stock.
Cloud Division AWS Reports Strongest Growth in Years
Operationally, the company presented a mixed picture, with one segment standing out. Amazon Web Services (AWS) remained a clear bright spot. The cloud unit saw revenue surge by 24% to $35.6 billion, marking its fastest growth rate in 13 quarters and easily exceeding analyst projections.
The expansion is being fueled significantly by demand for artificial intelligence infrastructure:
* Capacity for Amazon’s new Trainium2 chips is already fully booked.
* The business for its specialized chips, Trainium and Graviton, has now reached an annual revenue run rate exceeding $10 billion.
* The next-generation chip, Trainium3, is already in production.
A Quarter of Mixed Financial Results
At the group level, fourth-quarter sales climbed 14% to $213.4 billion, coming in slightly ahead of forecasts. However, earnings per share of $1.95 narrowly missed the consensus estimate of $1.97. The bottom line was impacted by several one-time costs, including approximately $730 million in severance expenses and a further $1.1 billion to settle a tax dispute in Italy.
Should investors sell immediately? Or is it worth buying Amazon?
Looking ahead, Amazon provided first-quarter 2026 revenue guidance in the range of $173.5 to $178.5 billion.
Aggressive Spending Forecast Alarms Market
The primary catalyst for the selling pressure was not the review of the past quarter, but rather the aggressive forward-looking projection. Amazon’s planned capex of roughly $200 billion for 2026 vastly exceeds market expectations. On average, analysts had anticipated spending of just under $147 billion. For context, expenditures in 2025 are projected to be around $131 billion.
CEO Andy Jassy attributed the drastic increase to enormous demand for AI solutions, robotics, and satellite projects. While management anticipates high long-term returns on this invested capital, investors are concerned about the short-term impact on free cash flow. The equity reacted immediately: After closing at $222.69 prior to the earnings release, shares fell sharply on Friday, ending the trading session at $210.32.
The success of this massive bet on AI infrastructure will ultimately depend on how quickly Amazon can translate its substantial outlays into profitable growth.
Ad
Amazon Stock: Buy or Sell?! New Amazon Analysis from February 9 delivers the answer:
The latest Amazon figures speak for themselves: Urgent action needed for Amazon investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 9.
Amazon: Buy or sell? Read more here...
