Amazon shares tumble as $200B AI spending spree rattles investors | Latest Tech News
Amazon on Thursday projected a surge of more than 50% in capital expenditures this yr, becoming a member of its friends in a spending spree to construct out artificial-intelligence infrastructure, and sending its shares down 9% in after-hours trading.
It is the latest signal that Big Tech is not going to be hitting the brakes any time soon on hefty AI investments. Amazon shares closed down 4.4% during common trading as worries deepened about the large price of the artificial-intelligence increase.
The top 4 hyperscalers – Amazon, Microsoft, Alphabet’s Google and Meta – are anticipated to collectively spend more than $630 billion this yr.
CEO Andy Jassy struck a defiant tone in the company’s convention call to focus on outcomes, swiping at rivals and boasting about Amazon Web Service’s many new choices. Getty Images for Amazon Web Services
Amazon also forecast a first-quarter revenue vary whose decrease end would miss analysts’ expectations by a quarter, baking in roughly $1 billion in increased prices associated to its high-speed web business Leo, as effectively as investment in fast commerce and sharper costs in its worldwide shops business.
The company said it expects to invest about $200 billion in capital expenditures across Amazon in 2026, in contrast with about $131 billion in 2025. Amazon’s forecast for first-quarter working income of $16.5 billion to $21.5 billion disillusioned, falling below analysts’ estimate of $22.04 billion.
Tech earnings over the past few days have shown Wall Street has a clear message for tech companies: Soaring AI spending can continue only if corporations show commensurate operational or financial returns.
“We wanted to see more of a consecutive cadence of strong earnings growth and that’s just not happening here,” said Dave Wagner, portfolio supervisor at Aptus Capital Advisors, referring to Amazon’s outcomes.
“The market just dislikes the substantial amount of money that keeps getting put into capex for these growth rates.”
An Amazon Web Services AI data middle in New Carlisle, Ind. REUTERS
Google’s eye-popping capex forecast of $175 billion to $185 billion for the yr received a go from investors on Wednesday as the company delivered stellar growth in its cloud income, as did Meta’s plan to spend between $115 billion and $135 billion.
But investors punished Microsoft’s stock last week after its cloud unit growth just squeaked past estimates.
For Amazon, the most important cloud-services supplier in the world, enterprise demand for both AI infrastructure and core digital migration workloads has been strong, even as industrywide capability constraints restrict its skill to absolutely meet the demand.
AWS’ gross sales growth of 24% was the most important in 13 quarters, but that was overshadowed by the company’s capex surge. Getty Images for Amazon Web Services
The company invested closely in the fourth quarter to ease those constraints. It launched its AI infrastructure project “Rainier,” bringing almost half a million of its in-house Trainium2 chips online, primarily for use by Claude chatbot-maker Anthropic.
Its high projected spending in 2026 shall be more than working money movement, said Asit Sharma, senior investment analyst at The Motley Fool. “This hardly assuages investors’ fears that Amazon and fellow Big Tech friends are dialing up the risk of an overspend on AI infrastructure. “
Although a smaller unit for Amazon, contributing just 15% to 20% of general gross sales, cloud platform Amazon Web Services generates over 60% of the company’s working revenue. Its fourth-quarter gross sales growth of 24% was the most important in 13 quarters, but that was overshadowed by the company’s capex surge.
Amazon expects to invest about $200 billion in capital expenditures across Amazon in 2026, in contrast with about $131 billion in 2025. AFP via Getty Images
Amazon’s rivals Google Cloud and Microsoft’s Azure, by comparability, boosted gross sales by 48% and 39%, respectively, in last yr’s remaining quarter.
CEO Andy Jassy struck a defiant tone in the company’s convention call to focus on outcomes, swiping at rivals and boasting about AWS’s many new choices.
“As a reminder,” he said. “It’s very different having 24% year-over-year growth on $142 billion annualized run rate, than to have a higher-percentage growth on a meaningfully smaller base, which is the case with our competitors.”
Amazon has also been investing in its e-commerce business, in search of to draw more prospects by increasing to rural areas in the United States, boosting its same-day and next-day supply capabilities and deepening its push into perishable meals.
But Amazon took $610 million in asset impairments associated primarily to its bodily shops unit, which incorporates Amazon Go and Amazon Fresh grocery shops. The company said it was retreating from bodily shops by closing all of its Fresh and Go shops and changing some into Whole Foods areas.
Amazon said it was retreating from bodily shops by closing all of its Fresh and Go shops and changing some into Whole Foods areas. REUTERS
The company has been making major adjustments in its retail division, the latest wager being an growth of its Whole Foods footprint and a 225,000-square-foot mega-store meant to compete with the likes of Walmart and Costco.
Amazon’s promoting business continues to be a spotlight. Sales jumped 22% in the fourth quarter to $21.3 billion and Jassy said the company has added AI choices to Prime Video so that entrepreneurs can create advertisements with restricted human interplay.
The Seattle-based company laid off 14,000 company workers in the quarter and earlier this yr laid off another 16,000, which it has said was needed due to efficiencies gained from AI use and a need to change company tradition. Still, it completed the yr with 21,000 more workers than the same period in 2024.
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