NEW YORK, Feb 7, 2026, 05:00 (EST)
- Amazon stock slipped after the company laid out roughly $200 billion in planned capital spending for 2026, much of it earmarked for AWS and AI infrastructure.
- First-quarter operating income guidance from the company fell short of expectations.
- It’s another worry for investors already eyeing the soaring AI spending by Big Tech.
Amazon.com shares were down 9% Friday as investors balked at the company’s warning of some $200 billion in capex planned for 2026, plus a muted profit forecast. If that slide persists, Amazon’s market cap shrinks by about $200 billion. CEO Andy Jassy pointed to AWS’s 24% revenue jump, though that lags behind Azure, up 39%, and Google Cloud, which grew 48%. 1
The drop highlighted just how skittish investors have gotten over AI costs that hit the bottom line, rather than being tucked away in R&D budgets. Some Wall Street analysts are still backing Amazon, though they’ve pulled back on their price targets after the latest results. Shares have lost roughly 9% since the start of the year. 2
Amazon is projecting first-quarter operating income between $16.5 billion and $21.5 billion, with net sales expected to land somewhere from $173.5 billion to $178.5 billion, according to a filing. That forecast factors in roughly $1 billion more in costs versus last year, reflecting spending on Amazon Leo—the company’s low-Earth orbit satellite push—plus stepped-up investment in fast delivery and price cuts across its international stores. 3
Amazon reported fourth-quarter net sales up 14% to $213.4 billion, with operating income hitting $25.0 billion. Net income landed at $21.2 billion, or $1.95 a share. The results factored in $1.1 billion related to tax settlements in Italy and a legal case, plus $730 million in severance charges and $610 million in impairments, mostly from its physical stores. Free cash flow for the past year slipped to $11.2 billion as property and equipment spending surged, which Amazon attributed mainly to AI investments. 4
During the earnings call, Jassy put Amazon.com’s planned capital expenditures at around $200 billion, most of it earmarked for AWS. “We have very high demand,” he said. He pegged AWS’s size at a $142 billion annualized run rate—an estimate based on the latest sales numbers. 5
Amazon’s outlook for 2026 capital spending landed at $200 billion, a jump from $131 billion pegged for 2025, sending shares tumbling 11.5% in after-hours trading Thursday. Combined, the four biggest hyperscalers — Amazon, Microsoft, Google, Meta — are on track to pour more than $630 billion into data centers and related infrastructure this year. “Amazon has to invest at these levels just to stay in the race,” said D.A. Davidson’s Gil Luria. 6
UBS analysts Stephen Ju and Vanessa Fong bumped up their joint capex forecasts for Amazon following management’s comments about plans to double power capacity again by 2027. Their view: investors haven’t yet factored in the possibility that AWS revenue could double as a result of the added spending. 7
Amazon’s ramped-up spending narrows its margin for error—especially if growth in cloud demand stalls or clients tap the brakes on fresh AI projects. Delayed payback only tightens the squeeze on cash flow, keeping investors’ eyes on mounting costs rather than the company’s sales pitch.
Jassy pitches the spending as a response to demand, saying it safeguards AWS’s edge. But investors see a timing challenge—waiting to see when the AI boom actually delivers profits big enough to fund more data centers and semiconductors.
