Amazon Stock Plunges After $200 Billion Spending Plan

Amazon, the tech and retail behemoth that has long been a bellwether for the broader market, sent shockwaves through Wall Street on February 5, 2026. The company’s fourth-quarter earnings report, though largely in line with expectations on several key metrics, triggered a sharp sell-off in its stock, falling as much as 10% in after-hours trading. The culprit? A jaw-dropping $200 billion capital expenditure forecast for 2026—far above what analysts had penciled in—and a candid signal from CEO Andy Jassy that Amazon is betting big on artificial intelligence, custom chips, and next-generation infrastructure, even if it means some near-term pain.

Net sales for the quarter clocked in at $213.39 billion, just ahead of the $211.49 billion estimate, according to Bloomberg. Earnings per share landed at $1.95, a hair below the $1.96 consensus. On the surface, these numbers would typically be cause for cautious optimism. But investors were laser-focused on Amazon’s spending plans, which overshadowed the otherwise solid results.

Jassy, speaking on the company’s earnings call, made no bones about Amazon’s ambitions. “We’re going to invest aggressively here. And we’re going to invest to be the leader in this space,” he declared, as reported by Business Insider. The “space” in question? Artificial intelligence, custom silicon, robotics, and the cloud. Jassy insisted, “This isn’t some sort of quixotic top line grab,” expressing confidence that the massive investments will pay off in the long run.

The lion’s share of the $200 billion in planned capital expenditures is earmarked for Amazon Web Services (AWS), the company’s cloud juggernaut. AWS posted a 24% year-over-year revenue jump in the fourth quarter, raking in $35.58 billion—well ahead of Wall Street’s 21% growth estimate. Jassy touted this as “our fastest growth in 13 quarters,” and emphasized that AWS is “monetizing capacity as fast as we can install it.”

To meet surging demand, Amazon has added 3.9 gigawatts of computing power over the past year, effectively doubling AWS’s capacity since 2022. Jassy revealed that the company expects to double its computing power again by the end of 2027, positioning AWS to outpace rivals like Google and Microsoft in the race to supply AI compute power. According to Bernstein analysts, “We are in a supply-constrained environment for AI compute and AWS are world-class at bringing more compute capacity online.”

Amazon’s custom chip business, featuring Trainium and Graviton processors, was another highlight. Zacks Investment Research’s Ethan Feller noted that the chip division now boasts an annual revenue run rate exceeding $10 billion and is “growing triple digits.” Feller added, “This is Amazon reducing its Nvidia dependency while improving margins, a critical competitive advantage if it scales.” Jassy echoed this optimism, saying, “It’s early days with what’s possible here.” The company expects its Trainium 3 chip supply to be “committed by somewhere around the middle of this year.”

But while the technology story is compelling, the financial picture is more complicated. Amazon’s fourth-quarter operating income was dented by $730 million in severance costs tied to recent layoffs, $610 million in asset impairments related to its physical stores, and a hefty $1.1 billion to resolve a tax dispute in Italy. Operating margin for the quarter landed at 11.7%, with North America at 9% and international at a slimmer 2.1%.

The company’s retail business, a core pillar, posted 10% year-over-year growth to $82.99 billion in the quarter, right in line with analyst expectations. Prime members received 8 billion items with same-day or next-day shipping in 2025—a 30% jump from 2024. Half of those shipments were groceries and everyday essentials, underscoring Amazon’s relentless push to speed up delivery and capture more of the essentials market. Jassy highlighted ongoing 30-minute delivery tests in the US, dubbed Amazon Now, and noted that in India, customers using fast delivery ordered from Amazon at “triple the frequency” compared to before.

Robotics plays a big role in this logistics revolution. Amazon now operates over 1 million robots in its fulfillment network, helping to drive cost efficiencies and accelerate order processing. CFO Brian Olsavsky said the company will continue to optimize inventory and expand automation to boost efficiency even further.

Advertising, another bright spot, grew 23% year over year to $21.3 billion in the quarter. EMARKETER analyst Sky Canaves pointed out that Amazon’s ad business benefited from the introduction of ads on Prime Video and the expansion of its demand-side platform, which now has partnerships with Netflix and Disney. The company’s unrivaled shopping data and AI-powered ad tech are helping it compete head-to-head with Google and The Trade Desk.

Amazon’s AI-powered shopping assistant, Rufus, saw use by 300 million customers in 2025, increasing the likelihood of purchase by 60%. Still, Jassy acknowledged that the AI shopping experience remains imperfect, noting, “We have to collectively figure out a better customer experience.” He also addressed the company’s partnership with OpenAI, announced in November 2025, saying Amazon wants “to continue to extend our partnership over time,” but emphasized that “this AI movement is not going to be a couple companies. It’s going to be thousands of companies over time.”

The grocery business, meanwhile, is at a crossroads. After shuttering about 60 Amazon Fresh stores and 15 Amazon Go locations, Amazon is pivoting to open more Whole Foods stores and doubling down on grocery delivery. Jassy stressed the importance of “staying sharp on price” to compete with rivals and said the company aims to be a formidable player in the grocery space.

Despite the ambitious spending and strategic pivots, the market’s reaction was swift and unforgiving. Shares tumbled up to 10% after hours and hovered around 8% down as the dust settled. Analysts are split: some, like Deutsche Bank’s Lee Horowitz, believe Amazon can be a top performer in 2026, while others warn that “investing in AI is testing balance sheets across Big Tech,” as Investing.com’s Thomas Monteiro put it. “For Amazon, this quarter makes clear that AI scale is no longer about ambition—it’s about balance-sheet endurance.”

As Amazon barrels into 2026 with big bets on AI, chips, and logistics, its ability to execute—and convince investors of the payoff—will be under the microscope. The stakes have rarely been higher, and the world will be watching to see if this gamble cements Amazon’s place at the top of the tech food chain, or if the risks finally catch up to the world’s most relentless innovator.