Amazon (AMZN) Stock Plunges 10% on $200 Billion Spending Shock Despite Cloud Beat

TLDR

• Amazon stock plunged 10% Thursday after Q4 earnings showed EPS of $1.95 versus $1.97 expected despite revenue beat at $213.4 billion.
• AWS cloud revenue topped estimates at $35.58 billion with 24% growth and operating margins expanding to 35%.
• Company shocked Wall Street with $200 billion capital spending plan for 2026, far above $148.86 billion analyst consensus.
• CEO Andy Jassy plans to double AWS computing capacity by end of 2027 to meet surging AI infrastructure demand.
• Q1 2026 revenue guidance of $173.5-$178.5 billion came in below Street expectations as company cuts 16,000 jobs.

Amazon shares crashed Thursday evening after the e-commerce giant reported mixed quarterly results. The stock fell as much as 10% in after-hours trading.

The company delivered fourth quarter adjusted earnings of $1.95 per share. Wall Street had expected $1.97 per share according to FactSet data.

Total revenue reached $213.4 billion for the quarter. That topped analyst estimates of $211.4 billion.

Amazon.com, Inc., AMZN

The real story emerged in Amazon’s 2026 spending plans. The company guided for $200 billion in capital expenditures this year, shocking analysts who forecast $148.86 billion.

AWS Powers Through With Strong Quarter

Amazon Web Services posted impressive results despite the parent company’s earnings miss. The cloud unit generated $35.58 billion in revenue, beating the $34.93 billion consensus.

AWS grew revenue 24% year-over-year. The division now represents roughly 17% of Amazon’s total revenue.

Operating income for AWS hit $12.47 billion. That crushed the $11.91 billion analyst estimate and makes up most of Amazon’s overall profit.

Margins expanded in the cloud business. AWS posted a 35% operating margin, up from 34.6% in the prior quarter.

CEO Andy Jassy highlighted the unit’s capacity expansion. AWS added nearly 4 gigawatts of computing capacity in 2025, double its 2022 levels.

Massive AI Investment Sparks Investor Concerns

The $200 billion spending guidance triggered the stock selloff. Most of the money will flow into AI infrastructure at AWS, Jassy explained.

“We just have a lot of growth, a lot of demand,” Jassy told analysts on the earnings call. He defended the spending as necessary to capture AI opportunities.

The CEO promised strong returns on the investment. “I’m very confident we’re going to have strong return on invested capital here,” he said.

Jassy said the company will double AWS capacity again by the end of 2027. The buildout responds to accelerating demand for AI workloads.

Competition in cloud AI services is heating up. Google Cloud posted 48% revenue growth last week, its fastest pace since 2021. Microsoft’s Azure grew 39%.

Revenue Outlook and Cost Cutting

Amazon projected first quarter revenue between $173.5 billion and $178.5 billion. The midpoint sits slightly below the $175.6 billion analyst consensus.

The company announced 16,000 corporate job cuts last month. Management cited the need to eliminate bureaucracy and reduce organizational layers.

UBS analyst Stephen Ju maintained his Buy rating Tuesday with a $311 price target. He called Amazon a “coiled spring” with strong AWS growth prospects ahead.

AWS introduced new AI services during the quarter. The unit launched Nova Forge for advanced model customization and secured a $38 billion commitment from OpenAI.

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