Amazon on Thursday projected a surge of more than 50% in capital expenditures this year, joining its peers in a spending spree to build out artificial-intelligence infrastructure, and sending its shares down 9% in after-hours trading.
It is the latest sign that Big Tech will not be hitting the brakes any time soon on hefty AI investments. Amazon shares closed down 4.4% during regular trading as worries deepened about the enormous cost of the artificial-intelligence boom.
The top four hyperscalers – Amazon, Microsoft, Alphabet’s Google and Meta – are expected to collectively spend more than $630 billion this year.
Amazon also forecast a first-quarter profit range whose lower end would miss analysts’ expectations by a quarter, baking in roughly $1 billion in higher costs related to its high-speed internet business Leo, as well as investment in quick commerce and sharper prices in its international stores business.
The company said it expects to invest about $200 billion in capital expenditures across Amazon in 2026, compared with about $131 billion in 2025. Amazon’s forecast for first-quarter operating income of $16.5 billion to $21.5 billion disappointed, 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 firms: Soaring AI spending can continue only if companies 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 manager at Aptus Capital Advisors, referring to Amazon’s results.
“The market just dislikes the substantial amount of money that keeps getting put into capex for these growth rates.”
Google’s eye-popping capex forecast of $175 billion to $185 billion for the year got a pass from investors on Wednesday as the company delivered stellar growth in its cloud revenue, 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 largest cloud-services provider in the world, enterprise demand for both AI infrastructure and core digital migration workloads has been strong, even as industrywide capacity constraints limit its ability to fully meet the demand.
The company invested heavily in the fourth quarter to ease those constraints. It launched its AI infrastructure project “Rainier,” bringing nearly half a million of its in-house Trainium2 chips online, primarily for use by Claude chatbot-maker Anthropic.
Its high projected spending in 2026 will be more than operating cash flow, said Asit Sharma, senior investment analyst at The Motley Fool. “This hardly assuages investors’ fears that Amazon and fellow Big Tech peers are dialing up the risk of an overspend on AI infrastructure. “
Although a smaller unit for Amazon, contributing just 15% to 20% of overall sales, cloud platform Amazon Web Services generates over 60% of the company’s operating profit. Its fourth-quarter sales growth of 24% was the biggest in 13 quarters, but that was overshadowed by the company’s capex surge.
Amazon’s rivals Google Cloud and Microsoft’s Azure, by comparison, boosted sales by 48% and 39%, respectively, in last year’s final quarter.
CEO Andy Jassy struck a defiant tone in the company’s conference call to discuss results, swiping at competitors and boasting about AWS’s many new offerings.
“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, seeking to draw more customers by expanding to rural areas in the United States, boosting its same-day and next-day delivery capabilities and deepening its push into perishable foods.
But Amazon took $610 million in asset impairments related primarily to its physical stores unit, which includes Amazon Go and Amazon Fresh grocery stores. The company said it was retreating from physical stores by closing all of its Fresh and Go stores and converting some into Whole Foods locations.
The company has been making major changes in its retail division, the latest bet being an expansion 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 advertising business continues to be a highlight. Sales jumped 22% in the fourth quarter to $21.3 billion and Jassy said the company has added AI options to Prime Video so that marketers can create ads with limited human interaction.
The Seattle-based company laid off 14,000 corporate employees in the quarter and earlier this year laid off another 16,000, which it has said was necessary due to efficiencies gained from AI use and a desire to change corporate culture. Still, it finished the year with 21,000 more employees than the same period in 2024.
