Amazon reported fourth-quarter earnings per share of $1.95, narrowly missing analyst forecasts, and its total quarterly revenue of $213.4 billion fell short of some top-line expectations. In after-hours trading, the stock dropped over 11% as investors reacted to both the earnings miss and the company’s forward guidance. The company’s first-quarter operating income forecast of $16.5 billion to $21.5 billion also undercut consensus estimates near $22 billion, raising concerns about near-term profitability.

Amazon Web Services delivered 24% year-over-year revenue growth in Q4—the fastest pace in 13 quarters—bringing its quarterly cloud revenue to $35.6 billion and annualized run rate to $142 billion. Despite this strong performance, AWS’s success was eclipsed by Amazon’s announcement of a $200 billion capital expenditure plan for 2026, up 52% from the roughly $131 billion spent in 2025. This guidance far exceeded analysts’ $146.6 billion estimate and outstripped peers’ AI infrastructure budgets, spooking markets over the scale of Big Tech’s spending binge.

CEO Andy Jassy defended the massive AI and infrastructure outlay, noting that in-house chips Trainium and Graviton are on track to generate over $10 billion in revenue this year and that partnerships—such as with Anthropic—are “going very well.” He argued that AI capacity is monetized as quickly as deployed and that AWS’s forecasting acumen limits wasted spending. Nevertheless, portfolio managers and analysts have pressed for financial guardrails, with one strategist warning that free cash flow could turn negative if returns on these investments fall short.

In addition to cloud and AI investments, Amazon took a $610 million impairment charge related to its physical stores division, closing all Fresh and Go locations and converting select sites to its Whole Foods banner. The company also laid off 14,000 corporate employees in Q4—following an earlier round of 16,000 cuts—citing efficiency gains from AI. Meanwhile, its advertising segment continued to shine, with fourth-quarter ad revenues rising 22% to $21.3 billion, as Amazon leverages AI tools to streamline ad creation on Prime Video and beyond.