Amazon on Thursday projected a surge of more than 50% in capital expenditures this year, joining its peers in a spending spree to build out artificial-intelligence infrastructure, and sending its shares down 10% in after-hours trading.
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It is the latest sign that Big Tech will not be hitting the brakes any time soon on hefty AI investments. Amazon shares closed down 4.4% during regular trading as worries deepened about the enormous cost of the artificial-intelligence boom.
The top four hyperscalers - Amazon, Microsoft, Alphabet's Google and Meta - are expected to collectively spend more than $630 billion this year.
Amazon also forecast a first-quarter profit range whose lower end would miss analysts' expectations by a quarter, baking in roughly $1 billion in higher costs related to its high-speed internet business Leo, as well as investment in quick commerce and sharper prices in its international stores business.
The company said it expects to invest about $200 billion in capital expenditures across Amazon in 2026, compared with about $131 billion in 2025. Amazon's forecast for first-quarter operating income of $16.5 billion to $21.5 billion disappointed, falling below analysts' estimate of $22.04 billion.
"We’re continuing to innovate at a rapid rate, and identify and knock down customer problems,” CEO Andy Jassy said in a statement on Thursday.
Tech earnings over the past few days have shown that Wall Street has a clear message for tech companies: Soaring AI spending can continue only if companies show commensurate operational or financial returns.
"We wanted to see more of a consecutive cadence of strong earnings growth and that's just not happening here," said Dave Wagner, portfolio manager at Aptus Capital Advisors, referring to Amazon's results.
"The market just dislikes the substantial amount of money that keeps getting put into capex for these growth rates."
Google's eye-popping capex forecast of $175 billion to $185 billion for the year got a pass from investors on Wednesday as the company delivered stellar growth in its cloud revenue, as did Meta's plan to spend between $115 billion and $135 billion.
But investors punished Microsoft's stock last week after its cloud unit growth just squeaked past estimates.
For Amazon, the largest cloud-services provider in the world, enterprise demand for both AI infrastructure and core digital migration workloads has been strong, even as industrywide capacity constraints limit its ability to fully meet the demand.
The company invested heavily in the fourth quarter to ease those constraints. It launched its AI infrastructure project "Rainier," bringing nearly half a million of its in-house Trainium2 chips online, primarily for use by Claude chatbot-maker Anthropic.
Although a smaller unit for Amazon, contributing just 15% to 20% of overall sales, cloud platform Amazon Web Services generates over 60% of the company's operating profit. Its fourth-quarter sales growth of 24% was the biggest in 13 quarters, but that was overshadowed by the company's capex surge.
Amazon's rivals Google Cloud and Microsoft's Azure, by comparison, boosted sales by 48% and 39%, respectively, in last year's final quarter.
Amazon has also been investing in its e-commerce business, seeking to draw more customers by expanding to rural areas in the United States, boosting its same-day and next-day delivery capabilities and deepening its push into perishable foods.
The company has been making major changes in its retail division, the latest bet being an expansion of its Whole Foods footprint and a 225,000-square-foot mega-store meant to compete with the likes of Walmart and Costco.
The Seattle-based company laid off 14,000 corporate employees in the quarter and earlier this year laid off another 16,000, which it has said was necessary due to efficiencies gained from AI use and a desire to change corporate culture. Still, it finished the year with 21,000 more employees than the same period in 2024.