Amazon Layoffs Hit 16,000 While CEO Commits $200 Billion for AI

Amazon cut 16,000 jobs last week. On Thursday, it said it would spend $200 billion this year on AI.

That's the tension now sitting at the centre of the world's largest online retailer. Wall Street didn't take it well.

A Spending Plan Nobody Expected

Amazon's fourth-quarter numbers were solid on paper. Revenue rose 14% year-on-year to $213.4 billion (£157.4 billion), beating the $211.3 billion (£155.9 billion) consensus from analysts polled by LSEG. Amazon Web Services grew 24%, its fastest clip in 13 quarters, bringing in $35.6 billion (£26.3 billion). Advertising pulled in $21.3 billion (£15.7 billion), up 23%, according to CNBC.

Then came the capex figure. FactSet estimates pegged 2026 capital spending at around $146.6 billion (£108.1 billion), while Amazon announced $200 billion (£147.5 billion). That's a $54 billion (£39.8 billion) gap nobody saw coming, up from roughly $131 billion (£96.6 billion) spent in 2025.

CEO Andy Jassy called it necessary. '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,' he said in the news release.

Shares dropped more than 10% in after-hours trading.

Why Your Portfolio Just Took a Hit

Here's the part that stings if you're an investor. Amazon missed earnings-per-share estimates by one cent, posting $1.95 (£1.44) versus the $1.97 (£1.45) Wall Street expected. Revenue beat. AWS beat. Advertising beat. None of it mattered.

First-quarter operating income guidance landed at $16.5 billion (£12.17 billion) to $21.5 billion (£15.9 billion), below the $22.2 billion (£16.4 billion) analysts expected. Short-term profits will take a hit so Amazon can invest in data centers and AI chips.

The company's market cap stood at roughly $2.4 trillion (£1.8 trillion) before the report. A 10% drop wipes out hundreds of billions in value. That loss reaches anyone holding the stock through index funds, pensions, or retirement accounts.

30,000 Jobs Gone Since October

The spending plan didn't arrive in a vacuum. Last week, Amazon confirmed 16,000 corporate layoffs, its biggest round since 2023. Add the 14,000 cuts from October, and about 30,000 positions have been eliminated, roughly 10% of Amazon's 350,000 corporate employees.

Beth Galetti, Amazon's senior vice-president of people experience, said the company was 'reducing layers, increasing ownership, and removing bureaucracy.' US-based staff get 90 days to find internal roles. Those who don't will receive severance.

The contradiction is hard to miss.

Workers are being told their jobs no longer exist while the company pledges $200 billion (£147.5 billion) to build the infrastructure that could replace even more of them. Economic studies cited by the Associated Press have warned that higher-paying roles in engineering and corporate management are among the most exposed to generative AI.

Big Tech's Billion-Dollar Bet

Amazon isn't the only one writing massive cheques. Alphabet said it expects to spend up to $185 billion (£136.4 billion) on capex this year. Meta's spending could nearly double to as much as $135 billion (£99.5 billion). Microsoft's quarterly capital outlay jumped 66% year-on-year, according to GeekWire. Combined, these companies are on track to pour more than $500 billion (£368.6 billion) into AI infrastructure in 2026 alone.

Investors are now sorting Big Tech into two groups: companies pairing spending with clean earnings growth and companies whose profit picture gets muddier with every billion committed. Amazon, with soft guidance and a capex number that blew past every estimate, landed squarely in the second group.

Jassy argued that demand is real. He pointed to non-AI workloads on AWS 'growing at a faster rate than we anticipated' and noted that custom Trainium and Graviton chips now bring in more than $10 billion (£7.4 billion) a year. But the market wants proof, not projections.

Amazon cut 16,000 workers and pledged $200 billion £147.5 billion) for AI. Investors lost 10% in a single evening. The question nobody can answer yet: who ends up being right?