Amazon's stock tumbled over 10% in after-hours trading on Thursday following the release of its fourth-quarter earnings report. The sharp decline was triggered by a combination of a slight earnings miss and a staggering $200 billion capital expenditure plan for 2026, which far exceeded analyst expectations of approximately $146.6 billion.
For Q4 2025, Amazon reported earnings per share (EPS) of $1.95, narrowly missing the Wall Street consensus of $1.97. Revenue, however, outperformed, coming in at $213.39 billion against an estimate of $211.33 billion. The company's cloud division, Amazon Web Services (AWS), was a standout, generating $35.58 billion in revenue, beating the forecast of $34.93 billion. The advertising segment also edged out predictions with $21.32 billion.
The core of investor concern was the massive $200 billion spending guidance. CEO Andy Jassy framed this as a critical investment in "once-in-a-generation" opportunities, primarily focused on artificial intelligence, chip development, and data center infrastructure to support the generative AI revolution. The company revealed that its Trainium and Graviton chips now generate over $10 billion in annual revenue, with its next-generation Trainium2 chips sold out and Trainium3 already in production with bookings through mid-2026.
Despite the market's negative reaction, the report highlighted significant underlying strength. Full-year 2025 net sales rose 12% to $716.9 billion. AWS revenue for the year surged 20% to $128.7 billion. Operating income for the year increased to $80 billion from $68.6 billion in 2024. However, free cash flow fell sharply to $11.2 billion from $38.2 billion the prior year, attributed to a $50.7 billion increase in capital investments, largely in AI.
Analysts like Bernstein's Mark Shmulik reiterated a bullish outlook, maintaining a $300 price target and highlighting AWS's unique capacity buildout advantage over rivals. The firm's Q1 2026 revenue guidance is between $173.5 billion and $178.5 billion.
