New York, Feb 5, 2026, 16:12 EST
- Amazon projects roughly $200 billion in capital spending by 2026, doubling down on its AI expansion
- Shares dropped almost 8% in after-hours trading following first-quarter operating income guidance that missed expectations
- Fourth-quarter sales jumped 14%, and AWS growth picked up speed, though free cash flow dropped due to increased investment
Amazon.com expects to spend around $200 billion on capital expenditures in 2026. Its shares dropped nearly 8% in after-hours trading Thursday, after the company’s profit forecast for the first quarter came in below Wall Street expectations. Amazon projected operating income between $16.5 billion and $21.5 billion, falling short of analysts’ $22.04 billion estimate, according to LSEG data compiled by Reuters. 1
Spending size is a key focus as markets grow wary of Big Tech’s AI expenses. U.S. stocks tumbled on Thursday, with the Nasdaq hitting its lowest point since November. Investors are uneasy over the timeline for AI investments to boost earnings. 2
Amazon’s fourth-quarter net sales hit $213.4 billion, marking a 14% increase from last year. AWS, the cloud division, saw revenue climb 24% to $35.6 billion. Operating income rose to $25.0 billion. However, free cash flow over the past 12 months dipped to $11.2 billion, weighed down by higher spending on property and equipment. The company attributed this mainly to “investments in artificial intelligence.” CEO Andy Jassy revealed plans to pour about $200 billion into capex by 2026, highlighting key areas like AI, chips, robotics, and low earth orbit satellites. 3
Capital expenditures, or capex, refer to funds companies invest in long-lived assets like data centers, chips, and networking equipment. While these outlays can drive future growth, they often squeeze cash flow in the short run, testing investors’ patience.
Before the release, Bloomberg consensus estimates viewed by Business Insider put fourth-quarter revenue around $211.5 billion, with AWS sales close to $34.9 billion. “This expenditure will loom large” on Amazon’s full-year earnings, Lee Sustar, a vice president and principal analyst at Forrester, told Business Insider, referring to the company’s spending plans. 4
Wedbush analysts, as reported by Proactive Investors, stuck with their “Outperform” rating and set a $340 price target ahead of the earnings release. They noted that “investor confidence has been building” following a strong AWS showing last quarter. Key drivers for the stock in 2026, they said, will be AWS momentum, growth in advertising, and the scale of capital expenditures. 5
This week, a Motley Fool column spotlighted Amazon as a key AI player, pointing to strong AWS demand, its partnership and investment in AI firm Anthropic, and the in-house development of Trainium chips. Out of 74 analyst ratings tracked by MarketWatch, 60 tagged the stock as a buy. 6
Amazon faces a familiar squeeze: it must invest heavily in cloud and AI capacity while proving those costs boost margins and cash flow. The company’s figures highlight this balancing act — AWS growth is picking up, but free cash flow is slipping.
The downside is straightforward. If AI workload demand dips or customers continue cutting budgets while Amazon faces higher depreciation from fresh investments, profits could suffer longer than investors expect. A fiercer price war in cloud or retail would only add pressure.
Investors are eager to see just how quickly AWS can ramp up capacity, what share of that $200 billion budget goes to AI infrastructure, and how fast Amazon can convert this spending spree into steady cash flow.
