Amazon Slides 20% After $200B Capex Plan Despite 24% AWS Growth
Amazon stock slid 20% from its record high after guiding $200 billion in capital spending for 2026 despite AWS delivering 24% growth in Q4, led by triple-digit revenue gains from custom AI chips. Analysts note a 26.5× forward earnings valuation looks attractive but warn of downside if cloud expansion slows.
1. Q4 Earnings and Stock Reaction
Amazon reported revenue and operating income above expectations in its fourth quarter, yet shares fell 20% from the all-time high of $260. The sell-off was driven by concerns over the unprecedented $200 billion capital expenditure guidance for 2026, which investors fear could pressure margins and cash flow.
2. AWS Performance and AI Initiatives
AWS grew revenues by 24% in Q4, marking its fastest expansion in 13 quarters. The cloud unit’s custom AI chips delivered triple-digit revenue increases, underscoring AWS’s position as a leading platform for enterprise AI model development.
3. 2026 Capital Expenditure Outlook
Amazon’s plan to deploy $200 billion in data-center investments next year aims to support rising AI demand and cloud capacity. While the spending underscores commitment to long-term growth, investors are concerned about return on investment and potential dilution of free cash flow.