Amazon stock slides 9% as 2026 capex guidance blows past expectations

Investing.com — Amazon.com (NASDAQ:AMZN) on Thursday beat quarterly top-line estimates, but forecasted capital expenditures of about $200 billion for 2026, much higher than expected.

Shares of the company slumped 8.7% after hours.

Amazon’s results come at a time when Wall Street is seeing a heavy rotation out of technology stocks into other sectors.

Investors have shifted from a mindset where the broad technology sector was seen as benefiting from artificial intelligence to one where there will be specific winners and losers due to AI. Software companies have been identified as losers, and a slide in that sub-sector has bled into chipmakers and the broader landscape.

Traders are also concerned about elevated valuations and massive spending plans. Amazon’s $200 billion outlook blew past the consensus figure of $146.11 billion.

The guidance comes just a day after Google-parent Alphabet (NASDAQ:GOOGL) stunned the Street with capital expenditure plans of its own of up to $185 billion in 2026.

Looking at its quarterly numbers, Amazon missed profit expectations by a cent, earning $1.95 per share on revenue of $213.39 billion (up 13.6% Y/Y) for Q4 2025. The top-line consensus was $211.27 billion.

“Amazon delivered a slightly mixed picture with strong overall revenue growth and a standout boost from the cloud unit’s much anticipated reacceleration picking up greater speed,” Emarketer principal analyst Sky Canaves said.

In other guidance, Amazon sees Q1 2026 revenue of $173.50 billion to $178.50 billion, compared to the estimate of $175.20 billion.

“AWS growing 24% (our fastest growth in 13 quarters), Advertising growing 22%, Stores growing briskly across North America and International, our chips business growing triple digit percentages year-over-year,” top boss Andy Jassy said in a statement.

“This growth is happening because we’re continuing to innovate at a rapid rate, and identify and knock down customer problems,” he said.

“With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital,” Jassy added.

For the Magnificent 7 member, Amazon Web Services represents its AI ambitions and is also its fastest growing segment. It pulled in revenue of $35.58 billion in Q4, up 23.6% Y/Y. The business, aside from cloud computing, houses Amazon’s tools and infrastructure for building AI agents and apps, such as Bedrock, and other products such as Alexa and Polly.

“The cloud unit achieved the rare feat of growing faster than the ads business in Q4 with improved operating margins,” Emarketer’s Canaves said.

The retail and tech giant also has a significant investment in Anthropic, the AI startup that has developed Claude.

In AWS, Amazon in October last year said it had added 3.8 gigawatts of cloud computing power capacity in the past 12 months, more than any other cloud provider. CEO Jassy on the conference call had said “we’re now double the power capacity that AWS was in 2022, and we’re on track to double again by 2027.”

UBS in its earnings preview note had said the possible outcome of AMZN’s ambitious capex plans was not being priced in.

“Given plans to double capacity by 2027, we have raised our aggregated 4Q25-4Q27 CapEx estimates from $300 billion to $344 billion (AWS $225 billion to $260 billion),” UBS analysts Stephen Ju and Vanessa Fong had said.

“In our view AMZN shares is still a coiled spring as neither us nor the Street are pricing in 2028 AWS revenue as having doubled after the incremental capital intensity. That scenario should result in an incremental ~$20 billion in FCF for 2028,” they said.

The Seattle-based behemoth’s stock has struggled against its Magnificent 7 peers. Amazon posted a 5.2% gain in 2024, the worst performance in the elite club, and significantly lower than the benchmark S&P 500 index’s 16.4% climb. The stock hasn’t fared that well this year either, up 0.9% YTD compared to the S&P’s 0.5%.

Despite all the attention on AI, the bulk of Amazon’s business remains its e-commerce and retail operations, and its subscriptions like Prime, housed in its North America segment. It brought in revenue of $127.08 billion in Q4, up 9.9% Y/Y.

Mounting economic headwinds have pressured consumers last year, with the National Retail Federation predicting 2025 holiday sales growth of 4.1%, down from 2024’s 4.3%. A key gauge of consumer confidence recently fell to its lowest level since May 2014.

“The core retail business maintained solid growth through the all-important holiday quarter, with a notable improvement in North America profitability driven by operational leverage in fulfillment despite the expansion of ever-faster delivery. Amazon’s AI shopping assistant Rufus is gaining traction and driving more sales among users,” Emarketer’s Canaves said.

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