The group Amazon of the multi-billionaire Jeff Bezos has forecast a more than 50% increase in capital expenditures this year, joining the ranks of magacaps that are participating in the incredible rush to spending on developing artificial intelligence infrastructureInvestors, worried that these new spendings will fail totranslate into adequate profitsi, have penalised the title which, already down by 4,4% during official trading, Wall Street, fell another 11,5% in theafter hours when the data was released. This morning in pre-market trading, the stock lost 8%.
As shares reeled on news that the Seattle company would invested 200 billion of dollars in 2026, theCEO Andy Jassy He took a defensive tone during the call with investors. "We want to remember," Jassy said, referring to the cloud platform's results. Amazon Web Services (Aws) “that it is very different to have 24% annual growth on an annualized growth rate of $142 billion, versus higher percentage growth on a significantly smaller base, as is the case with our competitors". The AWS revenue grew to $35,6 billion in the December quarter, while Google Cloud grew 48% to $17,75 billion. ecosystem in the same period, with the cloud of Azure, recorded a surge of 39%.
Amazon predicts a operating profit for first quarter between 16,5 and 21,5 billion dollars, (against expectations of around 22 billion) with a contribution of around 1 billion dollars, partly due to the higher Costs his high-speed satellite Internet division, Leo (Low Earth Orbit) which is expected to launch this year, challenging Elon Musk's Starlink with its own constellation, already supported by launch agreements with SpaceX and Blue Origin.
Small but mighty: Amazon focuses on Web Services
Amazon Web Services, although it is a small unit in Amazon, contributing only 15-20% of overall sales, has generated more than 60% of the company's operating profit. Sales growth of 24% in fourth quarter it was the higher in 13 quarters, albeit overshadowed by the company's surge in capital expenditure.
Jassy he dedicated a large part of the post-financial conference call to talk about the new AWS offerings. He stressed, for example, that AWS has launched or will soon launch more than 1.000 new applications, in addition to a competitive bot for AI-powered customer service and live sports alerts. “We are incredibly combative,” Jassy said. “In every one of our activities, you see a very broad use of artificial intelligence to improve the customer experience and, in many cases, simply to completely reinvent what was done before.”
Amazon has also invested in its e-commerce business, trying to attract more customers by expanding into areas rural areas of the United States, strengthening its capacity to delivery within the day or the next day and trying to improve the sale of perishable food products.
Instead Amazon suffered Prevention for $610 million, mainly related to its division physical stores, which includes Amazon Go and Amazon Fresh supermarkets. The company is abandoning physical stores by closing all its Fresh and Go locations and converting some of them into Whole Foods stores, its latest bet, along with the creation of a 21.000-square-foot megastore intended to compete with companies like Walmart and Costco.
Il advertising sector Amazon continues to be a strength. The sales are increased by 22% in the fourth quarter, reaching $21,3 billion, and Jassy highlighted that the company has added artificial intelligence options to Prime Video, so marketers can create ads with limited human interaction.
The Seattle-based company he fired 14.000 company employees were laid off in the quarter and another 16.000 were laid off earlier this year, which it said were necessary for the efficiency gains it had achieved through the use of artificial intelligence and its desire to change the company culture. However, it ended the year with 21.000 more employees compared to the same period of the 2024.
Amazon, Microsoft, Google and Meta together expect to spend more than $630 billion in 2026
Amazon's results are the latest sign that the Big Tech They have no plans to slow down their massive investments in artificial intelligence anytime soon. Analysts predict that the four major hyperscalers, Amazon, Microsoft, Google and Meta, together they will spend more than 630 billion dollars this year. Wall Street's attention, still in sharp decline yesterday, is on operational or financial returns of these companies, to try to understand whether they are proportional to the growing spending on artificial intelligence.
The Alphabet, the parent company of Google, raised its spending plans yesterday, sending its shares down as much as 8% from the previous day, though they closed essentially unchanged. Shares were stable in premarket trading today.
What analysts think
"A recurring theme is emerging: Both Alphabet and Amazon have delivered solid business performance, driven by better-than-expected cloud growth. But this hasn't been enough to divert markets from their growing capital investment plans," said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
“The market does not like the significant amount of money that is continually being invested in capital expenditures to achieve these growth rates,” he told Reuters Dave Wagner, portfolio manager at Aptus Capital Advisors. The high grocery expected by Amazon in 2026 will be higher than operating cash flow, added Asit Sharma, senior investment analyst at The Motley Fool, while Gil Luria, an analyst at DA Davidson, said: “Amazon has to invest at these levels just to stay in the race.”
