Amazon’s fourth-quarter earnings report sent shockwaves through Wall Street, with the company’s stock plummeting 10% in after-hours trading following the announcement of an unprecedented $200 billion capital expenditure plan for 2026—significantly exceeding analyst estimates of $146.11 billion. CEO Andy Jassy made clear that the massive investment is primarily focused on AI infrastructure and AWS cloud computing capabilities.
While Amazon’s core financial metrics largely met expectations—with net sales of $213.39 billion versus estimates of $211.49 billion and earnings per share of $1.95 compared to the $1.96 forecast—investors fixated on the enormous spending commitment. AWS, Amazon’s cloud computing division, emerged as a bright spot with 24% year-over-year growth, reaching $35.6 billion in quarterly revenue and beating Wall Street’s 21% growth estimate. Jassy called this “our fastest growth in 13 quarters.”
The CEO emphasized Amazon’s aggressive AI ambitions during the earnings call, stating the company plans to double its computing power by the end of 2027. Amazon has already added 3.9 gigawatts of computing capacity over the past 12 months—twice what AWS had in 2022. Amazon’s custom AI chip business, featuring Trainium and Graviton processors, has reached an annual revenue run rate exceeding $10 billion and is growing at triple-digit rates, according to Zacks Investment Research.
Jassy highlighted Amazon’s AI shopping assistant Rufus, which attracted 300 million users in 2025, with these customers being 60% more likely to complete purchases. However, he acknowledged that “the customer shopping experience needs to improve,” noting issues with AI agents not knowing shopping history and getting product details wrong.
The company also disclosed its partnership with OpenAI, announced in November, with Jassy expressing interest in expanding the collaboration while maintaining that “this AI movement is not going to be a couple companies—it’s going to be thousands of companies over time.”
Fourth-quarter operating income was impacted by $730 million in severance costs from recent layoffs, $610 million in asset impairments on physical stores, and $1.1 billion to resolve an Italian tax dispute. Despite these headwinds, Amazon’s advertising business grew 23% year-over-year to $21.3 billion, driven by Prime Video and AI-powered ad technology.
Key Quotes
We’re going to invest aggressively here. And we’re going to invest to be the leader in this space
CEO Andy Jassy made this statement during the earnings call, defending Amazon’s $200 billion capex plan despite investor concerns. This quote encapsulates Amazon’s determination to dominate AI infrastructure, even at the cost of short-term stock performance.
It’s early days with what’s possible here
Jassy said this regarding Amazon’s custom AI chip business, which has already reached $10 billion in annual revenue. The statement suggests Amazon sees enormous untapped potential in its semiconductor efforts, positioning chips as a key competitive advantage in AI.
We’re monetizing capacity as fast as we can install it
Jassy explained why AWS is driving most of Amazon’s $200 billion investment, emphasizing that customer demand for AI computing power is outpacing supply. This reveals the intense market demand for AI infrastructure and validates Amazon’s aggressive spending strategy.
This isn’t some sort of quixotic top line grab
Jassy defended the massive AI investment against potential criticism that Amazon is chasing growth without profitability. He emphasized confidence that the investment will deliver long-term returns, attempting to reassure investors concerned about the unprecedented spending levels.
Our Take
Amazon’s earnings reveal a fundamental tension in the AI economy: the gap between AI’s promise and its immediate financial impact. While AWS growth accelerated and custom chips gained traction, the $200 billion price tag spooked investors who are increasingly questioning when AI investments will translate to profits. This represents a maturation of AI market sentiment—from unbridled enthusiasm to demanding accountability.
The success of Amazon’s chip strategy is particularly noteworthy, demonstrating that vertical integration in AI can work at massive scale. Achieving $10 billion in chip revenue while reducing Nvidia dependency could inspire other cloud providers to accelerate their own semiconductor efforts, potentially fragmenting the AI hardware market.
Most intriguingly, Jassy’s admission that AI shopping experiences “need to improve” despite 300 million Rufus users highlights a broader industry challenge: AI adoption doesn’t guarantee AI excellence. The technology remains imperfect, and customer expectations are rising faster than AI capabilities—a reality that could define the next phase of AI development.
Why This Matters
Amazon’s $200 billion AI investment represents the largest capital commitment in Big Tech’s AI arms race, signaling that the competition for AI dominance is intensifying beyond previous expectations. This massive spending plan underscores a critical reality: building AI infrastructure at scale requires unprecedented financial resources, testing even the strongest balance sheets in technology.
The market’s negative reaction—despite strong AWS performance—reveals investor anxiety about AI profitability timelines and return on investment. As Investing.com analyst Thomas Monteiro noted, “AI scale is no longer about ambition—it’s about balance-sheet endurance.” This shift from AI enthusiasm to scrutiny of AI economics could reshape how tech companies approach their AI strategies.
Amazon’s success with custom AI chips also signals a strategic pivot away from Nvidia dependency, potentially disrupting the AI hardware market. With Trainium and Graviton chips achieving $10 billion in annual revenue, Amazon is proving that vertical integration in AI infrastructure can deliver both cost advantages and competitive differentiation. This development could accelerate the trend of major cloud providers developing proprietary AI hardware, fundamentally altering the AI chip landscape.
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Source: https://www.businessinsider.com/amazon-report-q4-earnings-call-amzn-stock-live-updates-2026-2