Amazon $AMZN ( ▼ 1.56% ) just reminded Wall Street that even cloud giants can trip over their own spending spree. The company missed on earnings, issued softer-than-expected profit guidance, and told investors it plans to pour an eye-popping $200 billion into capital expenditures next year. Shares slid sharply in after-hours trading as the market tried to digest all of that at once.
Revenue growth looked solid, but profits were the real buzzkill.
Sales Up, Profits Down, Mood Worse
For the fourth quarter, Amazon posted earnings per share of $1.95, just below expectations. Revenue rose 14% year over year to $213.4 billion, beating estimates, but that wasn’t enough to calm investors.
The bigger concern was guidance. Amazon expects first-quarter operating income of $16.5 billion to $21.5 billion, well below what Wall Street had penciled in. Sales guidance was roughly in line, but when profit outlooks wobble, the stock usually does too.
AWS Still Booming on AI Demand
Amazon Web Services continued to be the workhorse. AWS revenue jumped 24% to $35.6 billion, ahead of expectations, as companies keep spending big on AI infrastructure.
Amazon also highlighted strong growth from its custom AI chips, Trainium and Graviton, which now generate more than $10 billion in annual revenue. The next-generation Trainium4 chips are expected to start shipping in 2027, signaling that Amazon is all-in on owning more of its AI hardware stack.
Spending Like There’s No Tomorrow
Capital expenditures came in at $39.5 billion for the quarter, well above expectations. And that was just the appetizer. Amazon said it expects to spend about $200 billion on capex in 2026, continuing the hyperscaler trend of massive AI infrastructure buildouts.
Elsewhere, advertising revenue climbed 23% to $21.37 billion, subscription revenue rose 14% to $13.1 billion, and physical store sales hit $5.85 billion. But those bright spots were overshadowed by the profit outlook and the scale of upcoming spending.
Add in recent layoffs and a market already nervous about whether AI investments will pay off fast enough, and investors decided to hit the sell button first and ask questions later.