Amazon’s stock experienced a significant dip in after-hours trading, tumbling 11% on Thursday. This downturn was largely attributed to investor apprehension surrounding the e-commerce giant’s ambitious capital expenditure plans, projecting a staggering $200 billion for the upcoming year. This figure not only represents a substantial increase from the previous year but also surpasses the spending forecasts of other major technology players.
In 2025, Amazon reported expenditures of approximately $131 billion on property and equipment, a notable jump from the roughly $83 billion invested the prior year. This surge in spending aligns with a broader trend across the tech industry, which has been aggressively investing in artificial intelligence infrastructure since the advent of advanced AI models.
Rival tech giants are also signaling substantial investments. Alphabet, Google’s parent company, announced plans to allocate up to $185 billion in 2026. Meta, meanwhile, indicated that its capital expenditures could nearly double to between $115 billion and $135 billion in 2026, reflecting the intense race to build out AI capabilities.
During a conference call with investors, analysts sought greater clarity on Amazon’s spending strategy and the timeline for realizing returns. CEO Andy Jassy expressed confidence in Amazon Web Services (AWS), the company’s cloud computing division, expecting a “strong return on invested capital,” although a specific timeframe was not provided.
Mark Mahaney, head of internet research at Evercore ISI, directly questioned Jassy about the confidence in long-term returns from this significant investment. Jassy responded by emphasizing the “very high demand” for Amazon’s AI compute services, necessitating increased investment in crucial infrastructure such as data centers, specialized chips, and networking equipment. He drew a parallel to the success of AWS, stating, “We have confidence that we, that these investments will yield strong returns on invested capital. We’ve done that with our core AWS business. I think that will very much be true here as well.”
AWS reported robust growth, with sales increasing by 24% to $35.6 billion in the latest quarter, exceeding analyst expectations and marking the cloud unit’s fastest growth in thirteen quarters. Jassy noted that AWS could have achieved even greater expansion had it possessed more capacity to meet demand, highlighting the company’s efforts to be “incredibly scrappy” in managing resources. Amazon’s cloud division added nearly 4 gigawatts of computing capacity in 2025, with plans to double this capacity by the end of 2027.
Addressing the evolving AI market, Jassy described it as a “barbell” structure. On one end are the AI-native research labs, and on the other are enterprises leveraging AI as a tool for “productivity and cost avoidance.” The space between these two extremes, he explained, is occupied by enterprises actively developing AI applications, a segment Jassy believes could represent the largest and most sustainable part of the market.
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