Amazon Stock Plunges After $200B Spending Plan for Aggressive AI Expansion, Q4 Earnings Miss

The Amazon stock tanked by over 10% during after-hours trading on Thursday after the company missed Q4 earnings estimates and declared a plan to spend a whopping $200 billion on AI infrastructure expansion in 2026.

The company reported Q4 earnings per share of $1.95 on revenue of $213.39 billion, which are higher than a year earlier, but earnings fell short of the $1.97 expected by analysts. Revenue in Amazon's cloud computing unit jumped 24% during the quarter, which CEO Andy Jassy said was Amazon Web Services' 'fastest growth in 13 quarters.'

For Q1 of 2026, Amazon expects revenue between $173.5 billion and $178.5 billion, compared with analysts' expectations of $175.6 billion.

The ecommerce giant said it expects capex to hit $200 billion in 2026, which is much higher than analysts' expectations of $146.6 billion and $131 billion in 2025. Amazon said it will aggressively invest in data centres and related infrastructure to match the growing demand for AI compute and services.

'With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital,' Jassy said in a statement.

He said during a conference call with investors that spending would 'predominantly' be on Amazon Web Services, where non-AI workloads are 'growing at a faster rate than we anticipated.'

'We have very high demand. Customers really want AWS for core and AI workloads, and we're monetizing capacity as fast as we can install it,' he added.

The results come as Amazon continues to downsize its workforce. The company recently said it would lay off 16,000 employees after trimming headcount by 14,000 in October 2025.

Amazon Not Alone When Its About AI Spending Boost

Stocks like Meta Platforms continue to face selling pressure despite posting upbeat quarterly results. The Meta stock price decline could be attributable to the company's decision to double capex in 2026 to up to $135 billion from $72.2 billion in 2025, as it prepares to launch Superintelligence Labs and invest in technical expertise.

Needham analyst Laura Martin recently said that the Meta stock is 'priced for perfection' but could tank by 15% if it misses growth targets. The investment firm is concerned that much of the capital expenditure is irreversible in the short term, which could rapidly compress margins if growth slows down. The analyst is more focused on the timing of Meta's performance rather than the company's competitive edge, and thinks that operating margins could fall to 30% in 2026 from 40% in 2025.

Google's parent company, Alphabet, also said it expects capex between $175 billion and $185 billion this year. 'We're seeing our AI investments and infrastructure drive revenue and growth across the board,' said Alphabet and Google CEO Sundar Pichai, adding that the company's higher capex will support its efforts to match growing customer demand and capitalise on the dynamic opportunities.

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