Mixed earnings, big AI spending drag Amazon stock

Amazon shares fell more than 10% in extended trading after the company posted mixed fourth-quarter results. 

Earnings came in at $1.95 per share, slightly below the $1.97 analysts expected. However, revenue beat forecasts, rising to $213.39 billion from estimates of $211.33 billion. 

Net income also improved to $21.19 billion, up from $20 billion last year.

Cloud and ads drive growth
Amazon Web Services (AWS) revenue grew 24% to $35.58 billion, its fastest growth in over three years. Advertising sales also climbed 23% to $21.32 billion. Both segments topped Wall Street expectations and helped lift overall sales.

However, investors grew cautious after Amazon announced plans to spend $200 billion on capital investments in 2026, mainly for AI data centers and cloud expansion. The figure is far higher than the $146.6 billion analysts expected.

For the current quarter, Amazon forecasts sales between $173.5 billion and $178.5 billion. 

The heavy spending outlook overshadowed strong growth and pressured the stock.

While investing heavily, Amazon has cut thousands of jobs. It closed Amazon Fresh and Amazon Go stores, laying off over 7,500 workers. It also eliminated about 30,000 corporate and tech jobs in October and January combined, to reduce bureaucracy.