Amazon shares saw a significant drop of 8% following the e-commerce giant’s release of its fourth-quarter financial results, which presented a mixed picture with earnings slightly missing expectations while revenue surpassed them. The company also signaled an aggressive increase in its 2026 capital expenditure forecast, projecting a massive $200 billion.
For the fourth quarter, Amazon reported earnings per share of $1.95, falling short of the $1.97 estimated by analysts polled by LSEG. However, revenue for the period came in at $213.39 billion, exceeding the consensus estimate of $211.33 billion.
Key business segments also demonstrated varied performance. Amazon Web Services (AWS), the company’s cloud computing division, generated $35.58 billion in revenue, outpacing the expected $34.93 billion. Similarly, the advertising segment posted $21.32 billion, slightly ahead of the $21.16 billion anticipated, according to StreetAccount.
The substantial upward revision in capital expenditure guidance is a clear signal of Amazon’s strategic focus on artificial intelligence. CEO Andy Jassy stated that the company expects to invest approximately $200 billion in capital expenditures across Amazon in 2026, a significant increase from the roughly $131 billion spent in 2025. This projection far exceeded the $146.6 billion anticipated by analysts, according to FactSet. Jassy emphasized that this investment is driven by “seminal opportunities like AI, chips, robotics, [and] low earth orbit satellites,” with an expectation of strong long-term returns on invested capital.
During an investor call, Jassy elaborated that the majority of this increased spending will be directed towards AWS, driven by unexpectedly robust demand for both core and AI-related workloads. He noted that non-AI workloads within AWS are “growing at a faster rate than we anticipated.” This follows Amazon’s strategic investments, such as the $11 billion Project Rainier AI data center opened in October, designed exclusively to support Anthropic’s workloads.
The surge in AI investment is a trend being mirrored across the tech industry. Alphabet, Google’s parent company, recently announced its intention to spend between $175 billion and $185 billion in 2026. Meta has also indicated that its capital expenditures could nearly double, ranging from $115 billion to $135 billion.
AWS demonstrated impressive growth in the fourth quarter, with revenue expanding by 24%, marking its fastest growth in thirteen quarters and exceeding the analyst expectation of 21.4%. This performance comes as Amazon works to counter the perception of losing market share in the cloud sector to competitors like Microsoft Azure, which recorded 39% growth, and Google Cloud, which saw a substantial 48% increase in revenue, its fastest since 2021.
Looking ahead to the current quarter, Amazon projects sales to be in the range of $173.5 billion to $178.5 billion, representing a growth rate of 11% to 15%. This falls within the LSEG consensus estimate of $175.6 billion.
Net income for the fourth quarter reached $21.19 billion, or $1.95 per share, an increase from $20 billion, or $1.86 per share, in the prior year.
These financial results were released amidst Amazon’s ongoing efforts to streamline its workforce. The company announced plans to lay off approximately 16,000 corporate employees, adding to the roughly 14,000 staff reductions made in October. As of the end of December, Amazon employed 1.57 million people globally, a modest 1% year-over-year increase, largely driven by its warehouse operations workforce.
The company’s advertising business continues to be a significant growth driver, with revenue increasing by 23% year over year to $21.3 billion during the fourth quarter.
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