Key Points
- Amazon delivered mixed fourth-quarter results.
- The company expects capital expenditures to reach about $200 billion in 2026.
- Tech giants are rapidly boosting spending to capture surging artificial intelligence demand.
Amazon shares tumbled 8% on Friday after the company reported mixed fourth-quarter earnings and dramatically raised its long-term spending forecast to $200 billion.
Here’s how Amazon performed compared with analyst expectations from LSEG:
- Earnings per share: $1.95 vs. $1.97 expected
- Revenue: $213.39 billion vs. $211.33 billion expected
Wall Street also focused on key business segments:
- Amazon Web Services (AWS): $35.58 billion vs. $34.93 billion expected (StreetAccount)
- Advertising: $21.32 billion vs. $21.16 billion expected (StreetAccount)
Massive AI Spending Push
AMAZN said capital expenditures will keep climbing as it pours money into data centers and infrastructure to meet booming AI demand.
The company expects capex to reach about $200 billion in 2026, far above analysts’ projection of $146.6 billion, according to FactSet. Amazon spent roughly $131 billion in 2025.
“With strong demand for our current services and major opportunities in AI, chips, robotics, and low-Earth-orbit satellites, we expect to invest about $200 billion across Amazon in 2026,” CEO Andy Jassy said, adding the company anticipates strong long-term returns.
During a call with investors, Jassy said most of the spending will go toward AWS, where even non-AI workloads are growing faster than expected. Last October, AMAZN launched its $11 billion AI data center, Project Rainier, built specifically to run workloads for Anthropic.
“We’re seeing extremely high demand,” Jassy said. “Customers want AWS for both core and AI workloads, and we’re monetizing capacity as quickly as we can deploy it.”
Big Tech’s AI Spending Race
Amazon isn’t alone. Tech giants are dramatically increasing AI investments:
- Alphabet (Google) expects to spend $175 billion to $185 billion in 2026
- Meta projected capex could jump to $115 billion to $135 billion
AWS Growth and Cloud Competition
AWS revenue grew 24% in Q4, beating expectations of 21.4% growth and marking its fastest growth in 13 quarters, according to Jassy.
Although AMAZN remains the global cloud infrastructure leader, competition is intensifying:
- Microsoft Azure: 39% growth last quarter
- Google Cloud: ~48% growth, fastest since 2021
Outlook and Financials
For the current quarter, Amazon expects sales between $173.5 billion and $178.5 billion, representing 11% to 15% growth. Analysts had forecast $175.6 billion.
- Net income (Q4): $21.19 billion, or $1.95 per share
- Year ago: $20 billion, or $1.86 per share
Layoffs and Workforce
Amazon continues restructuring its workforce. The company recently announced 16,000 corporate job cuts, following about 14,000 layoffs last October.
As of December, Amazon employed 1.57 million workers globally, up 1% year over year, largely driven by its warehouse workforce.
Advertising Keeps Climbing
Amazon’s advertising business remains a strong growth driver. Revenue rose 23% year over year to $21.3 billion in the fourth quarter.
