Amazon Stock Down Big On Earnings as Capex Plans Overshadow Revenue Growth

Amazon.com's stock (NASDAQ:AMZN) tumbled 11.2% in extended trading following the release of fourth-quarter earnings, pushing the stock below the psychologically significant $200 level to $197.75.

The sharp decline erases recent gains and brings the e-commerce and cloud computing giant to price levels not witnessed since the tariff-induced market pullback in May 2025.

The after-hours collapse came despite Amazon delivering solid top-line results, with fourth-quarter revenue climbing 14% year-over-year to $213.4 billion, marginally ahead of the $211.4 billion consensus estimate. However, earnings per share of $1.95 fell short of analyst expectations of $1.97, while net income reached $21.2 billion compared to $20 billion in the prior-year period.

Markets appeared to look past the revenue beat, focusing instead on aggressive spending plans and cautious near-term guidance that raised concerns about profitability compression.

The stock had already entered the earnings report under pressure, trading 6.76% lower on a one-year basis. The latest selloff compounds those losses, leaving shares at their most vulnerable technical position in nearly nine months.

AWS Acceleration Fails to Offset Spending Concerns

Amazon Web Services delivered the quarter's standout performance, posting 24% revenue growth to $35.6 billion, the cloud division's fastest expansion in 13 quarters. The acceleration underscores the intensifying demand for cloud infrastructure driven by artificial intelligence workloads, a key battleground where Amazon competes with Microsoft Azure and Google Cloud.

“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, this growth is happening because we're continuing to innovate at a rapid rate, and identify and knock down customer problems,” said Andy Jassy, President and CEO of Amazon.

The advertising business also contributed meaningfully, expanding 22% as Amazon continues to monetize its vast e-commerce ecosystem. Yet these operational bright spots were overshadowed by CEO Jassy's announcement of approximately $200 billion in capital expenditures planned for 2026, a staggering 60% increase from the $125 billion projected for 2025.

$200 Billion Capex Bet on Future Technologies

Jassy framed the unprecedented spending surge as essential for maintaining Amazon's competitive position across multiple emerging technology frontiers. “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,” the CEO stated.

Cautious Q1 Guidance Amplifies Investor Anxiety

Amazon's first-quarter outlook further dampened sentiment. The company projected revenue between $173.5 billion and $178.5 billion, representing 11% to 15% year-over-year growth.

While the midpoint of $176 billion sits slightly above the $175.24 billion consensus, the guidance includes a favorable 180 basis point tailwind from foreign exchange rates, suggesting underlying growth may be more modest.

Operating income guidance of $16.5 billion to $21.5 billion compares unfavorably with the $18.4 billion reported in the first quarter of 2025.

Amazon explicitly noted that this forecast incorporates approximately $1 billion in higher year-over-year costs related to scaling Amazon Leo, alongside investments in quick commerce capabilities and “even sharper prices” in international stores—a clear signal of intensifying competitive dynamics in global markets.

Technical and Valuation Context

From a technical perspective, Amazon shares now trade at their lowest levels since the May 2025 tariff scare, having broken below the $200 support level that had held through much of the past year. The stock reached a 52-week high of $258.60 before beginning its descent, and now sits roughly 23% below that peak.

At current levels around $197.75, Amazon carries a market capitalization of approximately $2.38 trillion and trades at a price-to-earnings ratio in the 32-33 range.

The valuation reflects markets weighing robust revenue growth and AWS momentum against margin pressure from elevated capital intensity and competitive pricing investments.

Amazon's decision to ramp capital spending to $200 billion positions the company for what management views as transformative technology shifts. The AI infrastructure buildout mirrors similar commitments from Microsoft and Google-parent Alphabet, all racing to capture enterprise AI workloads.