New York, Feb 6, 2026, 14:48 EST
- Amazon shares dropped roughly 9% following the announcement of a $200 billion capital expenditure plan through 2026
- Amazon’s Q4 net sales hit $213.4 billion, with AWS revenue climbing 24% to $35.6 billion
- Major U.S. tech companies are set to pour over $630 billion into AI infrastructure this year
Amazon shares dropped roughly 9% on Friday after the company revealed plans to shell out around $200 billion in 2026, sparking concerns over how fast artificial intelligence investments will turn profitable. This spending, called capital expenditures or capex, includes costs for data centers, chips, and other hardware.
Amazon’s forecast joins a broader surge in AI spending among U.S. tech giants, with plans to dump over $630 billion into data centers and AI chips this year. While investors anticipated higher capex, these numbers are steering the cloud giants—often dubbed hyperscalers for their vast computing infrastructures—toward a much heavier capital investment approach.
Some analysts found the size of the increase caught the market off guard. “The magnitude of the spend is materially greater than consensus expected,” MoffettNathanson analysts noted. AJ Bell investment director Russ Mould added that “positive surprises may be hard to achieve” for the group. Since Jan. 28, the S&P 500 software and services index has lost roughly $1 trillion in market value. 1
Amazon revealed its spending plan alongside fourth-quarter results that showed net sales up 14% to $213.4 billion, while AWS revenue surged 24% to $35.6 billion. CEO Andy Jassy described AWS growth as “our fastest growth in 13 quarters” and projected, “we expect to invest about $200 billion in capital expenditures across Amazon in 2026.” 2
Amazon reported operating income climbed to $25.0 billion, despite expenses from tax disputes in Italy, severance, and store-related impairments. Net income hit $21.2 billion, translating to $1.95 per diluted share.
Free cash flow, which is the cash remaining after capital expenditures, dropped to $11.2 billion over the past 12 months. Amazon pointed to a year-over-year surge in property and equipment purchases, driven by AI investments.
During the post-earnings call, Jassy addressed AWS’s 24% revenue growth, pointing out it lags behind Google Cloud’s 48% and Microsoft Azure’s 39% gains, but noted AWS operates at a much larger scale. The division posted $12.5 billion in operating income this quarter, making up half of Amazon’s $25.0 billion overall.
Should the losses persist, Amazon could lose roughly $200 billion in market value. Reuters data shows Amazon trades at around 27 times earnings, compared to about 22 for Microsoft and 28 for Alphabet.
Microsoft and Alphabet slid after posting their earnings this season, with investors shifting focus from short-term sales gains to the mounting costs of AI infrastructure. Analyst notes are once again drawing parallels to the dot-com boom, driven by the rapid pace and scale of the spending spree.
The downside looks like this: costs climb faster than income, cash flow remains tight, and returns take more time than anticipated to materialize. Amazon warned that fluctuations in demand, currency rates, energy costs, interest rates, and supply chain disruptions could all impact results.
Amazon predicts net sales between $173.5 billion and $178.5 billion for Q1 2026, with operating income expected to fall between $16.5 billion and $21.5 billion. The forecast factors in rising Amazon Leo expenses as the company expands, plus investments in quick commerce and reduced prices in its international stores segment, the company said.
