Amazon has announced plans to invest $200 billion in capital expenditures by 2026, predominantly focusing on developing artificial intelligence infrastructure. This extensive commitment has resulted in a notable drop in the company's stock price, which fell over 10% in after-hours trading, dipping below $200 due to investor concerns over the scale of the planned spending.
Despite the announcement coinciding with strong fourth-quarter results—where Amazon reported revenues of $213.4 billion and a net profit of $21.2 billion, aligning with analyst expectations—the market reaction highlights the tension between impressive earnings and substantial future expenditures. The company attributed the revenue boost to a successful holiday season along with a 24% year-over-year growth in its AWS cloud services, a crucial segment of its business.
In a move to streamline operations, Amazon has also indicated it will close certain underperforming units. The restructuring plan includes layoffs of 16,000 employees as part of broader efforts to reduce costs. Looking ahead, Amazon has projected first-quarter revenues between $173.5 billion and $178.5 billion, with operating income estimated between $16.5 billion and $21.5 billion.
Although AWS generated $35.6 billion in revenue for the fourth quarter, investor unease surrounding the magnitude of AI-related investments has overshadowed this success. The stock market response reflects growing concerns within the tech sector regarding escalating investments in artificial intelligence, prompting significant sell-offs.