Amazon.com Inc. experienced a notable decline in its stock price during after-hours trading on Thursday, despite announcing fourth-quarter revenue figures that surpassed Wall Street projections. The company reported net sales totaling $213.39 billion for the quarter, representing a 14% increase year over year and exceeding the expected $211.30 billion consensus estimate. Additionally, Amazon projected its upcoming first-quarter revenue to fall within a range of $173.5 billion to $178.5 billion, largely consistent with market expectations.
However, the stock reaction took a negative turn following comments by CEO Andy Jassy, who revealed ambitious capital expenditure plans for 2026. Amazon anticipates committing approximately $200 billion in investments aimed at expanding its artificial intelligence infrastructure, developing custom semiconductor chips, advancing robotics, and enhancing satellite network capabilities. This prospective 54% increase in capital expenditures compared to previous years signaled a major ramp-up in the company's spending and appears to have unsettled investors.
Consequently, Amazon's share price declined by 4.42%, closing at $222.69 on Thursday, before experiencing an additional 11.20% fall to $197.75 during after-hours trading sessions. The selloff reflects market apprehension regarding the potential impact of such a significant spending hike on near-term profitability and cash flow.
In response to the market's reaction, several analysts have offered divergent perspectives on the implications of Amazon's capex plans. Gene Munster from Deepwater Asset Management argued that the market failed to recognize the strategic context behind the expenditure boost. He noted that bringing capital spending closer to levels seen by peers such as Alphabet Inc. and Meta Platforms Inc. indicates Amazon's efforts to keep pace within a competitive landscape evolving rapidly around artificial intelligence and related technologies.
Similarly, CNBC's Jim Cramer acknowledged the short-term challenges faced by Amazon's stock but endorsed the justification for the scale of the company's investment plan. Speaking on social media platform X, Cramer did not minimize the likelihood of continued stock volatility in the immediate future but emphasized that the rationale for the expenditures—centered on long-term technological advancement and infrastructure development—merits consideration despite market headwinds.
Adding to the discussion, Daniel Newman, CEO of the Futurum Group, highlighted Amazon's evolving position within the artificial intelligence space. While the company initially trailed some rivals in AI adoption, Newman noted its increasing momentum, particularly through Amazon Web Services (AWS) customers integrating new AI tools. Moreover, he pointed out that Amazon stands to benefit from AI advances not only via cloud computing but also across its advertising, logistics, robotics, and ecommerce operations, signaling multiple growth vectors fueled by technology investments.
Amazon's AWS segment continues to demonstrate robust growth, generating $35.6 billion in revenue during the fourth quarter—up 24% year over year. Operating income from AWS rose to $12.5 billion compared to $10.6 billion in the previous year. For the full fiscal year, AWS revenue expanded 20% to reach $128.7 billion, underscoring the unit's critical contribution to Amazon's overall business performance.
Despite the stock's recent decline, Amazon shares maintain a strong position in quality rankings according to Benzinga's Edge Stock Rankings, exhibiting positive price momentum across various timeframes, including short-, medium-, and long-term horizons. This suggests investor interest remains supported by the company's fundamentals, even amid volatility driven by elevated capital spending.
In summary, Amazon confronts a complex market environment where optimism about its technological investment strategy coexists with concerns over near-term financial impacts. The company's aggressive $200 billion capex plan for 2026 highlights management's commitment to expanding capabilities in artificial intelligence and infrastructure, but also introduces uncertainties that command close attention from investors and analysts alike.