Wall Street woke up to a jolt on Friday after Amazon dropped a mixed earnings report that sent its stock tumbling and reignited fears about runaway Big Tech spending.
The e-commerce and cloud titan reported fourth-quarter results after Thursday’s closing bell, but it wasn’t the past that rattled investors — it was Amazon’s vision of the future.
A Costly Forecast Spooks Investors
Amazon revealed it expects Q1 operating income between $16.5 billion and $21.5 billion, well below Wall Street’s $22.2 billion estimate. That miss alone would have raised eyebrows. But the real shock came moments later.
The company announced plans to spend more than $200 billion in capital expenditures in 2026, a staggering leap from the $125 billion expected in 2025. The market reaction was swift and brutal: Amazon shares plunged 8% in premarket trading.
CEO Andy Jassy defended the spending surge, calling it a long-term investment in transformational technologies.
“With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low-earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026,” Jassy said, emphasizing confidence in long-term returns.
Earnings Beat… But Not Enough
On paper, Amazon’s quarter looked solid.
Earnings per share: $1.95 (just a penny shy of expectations)
Revenue: $213.4 billion, beating estimates of $211.5 billion
AWS revenue: $35.6 billion, topping forecasts
Advertising revenue: $21.3 billion
Online store sales: $83 billion
AWS once again proved its importance, delivering stronger-than-expected cloud revenue. Yet even that wasn’t enough to calm investors spooked by ballooning costs.
Big Tech’s AI Spending Arms Race
Amazon’s announcement didn’t land in isolation. It follows a wave of eye-popping spending plans across Silicon Valley.
Google beat earnings expectations earlier this week but saw shares slide after unveiling $185 billion in AI spending for 2026.
Meta and Microsoft both confirmed they’re ramping up AI investments — with wildly different reactions from the market. Traders applauded Meta’s strategy, but punished Microsoft, whose stock is now down more than 17% this year.
Amazon, meanwhile, is down 3.6% year-to-date, trailing Google, whose shares are up 4.6%.
Layoffs, Store Closures, and a Leaner Amazon
The earnings report also comes on the heels of major internal changes. Amazon recently announced plans to cut 16,000 jobs, part of a broader effort to “reduce layers, increase ownership, and remove bureaucracy.”
The company is also shuttering Amazon Fresh and Amazon Go stores, with some locations being replaced by Whole Foods outlets — another signal that Amazon is tightening operations even as it spends heavily on future tech.
The Big Question
Amazon is betting enormous sums that AI, automation, and space-based infrastructure will define the next era of growth. Wall Street, at least for now, isn’t convinced.
The question looming over the market: Is Amazon building the future — or overpaying for it?