After-hours plunge of over 11%! Amazon's $200 billion spending plan shocks the market; AWS achieves fastest growth in 13 quarters

After the close of U.S. Eastern Time on Thursday, Amazon released a mixed Q4 earnings report and raised its capital expenditure forecast for 2026 to $200 billion.

This spending plan not only exceeds the parent company of Google, Alphabet, but is also nearly double the expected expenditure scale of META this year. This astonishing “burn money” plan caused the company’s stock price to drop more than 11% in after-hours trading.

Below is the company’s Q4 performance compared to analyst expectations from LSEG survey:

Earnings per share: $1.95, up 4.8% year-over-year, versus an expected $1.97

Revenue: $213.39 billion, up 14% year-over-year, versus an expected $211.33 billion

Other key revenue data of interest to Wall Street includes

Amazon Web Services revenue: $35.58 billion, up 24% year-over-year, versus an expected $34.93 billion

Advertising business revenue: $21.32 billion, up 22% year-over-year, versus an expected $21.16 billion

This year’s expenditure scale expands to $200 billion

Amazon stated that due to its active investments in data centers and other infrastructure to meet the surge in AI demand, capital expenditure is expected to continue to increase significantly this year.

The company expects this year’s capital expenditure to reach $200 billion, far exceeding the previous analyst forecast of $146.6 billion, and significantly higher than the company’s $131 billion in capital expenditure for 2025.

Such a large expenditure plan has obviously stunned Wall Street and caused the company’s stock to plunge over 10% after hours.

Amazon CEO Andy Jassy explained in a statement:

“Given the strong demand for our existing products and groundbreaking opportunities like artificial intelligence, chips, robotics, and low Earth orbit satellites, we expect Amazon’s capital expenditure to reach about $200 billion in 2026, and anticipate that the long-term return on investment will be very substantial.”

During the earnings call, Jassy stated that “most” of these expenditures will be used for Amazon Web Services (AWS). In October last year, Amazon launched its $11 billion AI data center called Project Rainier, specifically designed to run workloads from Anthropic.

“Our demand is very strong,” Jassy emphasized, “Customers are indeed very keen on AWS solutions for core business and AI workloads, and we are deploying services as quickly as possible and achieving profitability.”

In this earnings season, major U.S. tech companies have announced large-scale AI investment plans. But even so, Amazon’s expenditure scale is arguably “unmatched.”

For example, just a day earlier, Google’s parent company Alphabet announced that its 2026 spending is expected to be between $175 billion and $185 billion; while META indicated that its capital expenditure might double from last year’s level, reaching $115 billion to $135 billion.

Rapid growth in cloud division

Amazon’s cloud computing division saw a 24% revenue increase in the fourth quarter, surpassing analyst expectations of 21.4%. Jassy said this was AWS’s fastest growth period in the past 13 quarters.

However, this growth rate still lags behind Google and Microsoft. In the previous quarter, Microsoft Azure’s revenue grew by 39%. Google’s cloud business revenue increased by about 48%, the fastest pace since 2021.

For the current quarter, Amazon expects revenue between $173.5 billion and $178.5 billion, representing growth of 11% to 15%. LSEG survey analysts forecasted sales of $175.6 billion.

As these results emerged, Amazon continued to reduce its workforce. Last week, the company announced it would cut about 16,000 employees, after already cutting approximately 14,000 employees in October last year.

(Source: Caixin)