Amazon with unbridled growth and extreme AI investments, but stock falls
Amazon is also investing record sums in AI, as its retail and cloud businesses continue to grow. However, earnings per share are lower than expected.
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Amazon.com continues to benefit from its growing retail business and the high demand for cloud capacity driven by artificial intelligence (AI). Consequently, the company is enormously increasing its investments for the current year by more than 50 percent compared to 2025, to now 200 billion US dollars. Observers had expected 146.6 billion dollars for 2026. While revenue and profits have risen again, investors had expected slightly higher earnings per share. Amazon's share price has likely fallen by around 11 percent in after-hours trading for this reason as well.
The increase in AI investments had been expected, and Google also announced record investments in its AI cloud yesterday. However, after Amazon invested around 131 billion dollars in 2025, the jump to 200 billion dollars for this year was unexpectedly high. The vast majority of this capital is intended for data centers and other infrastructure to meet the high demand for AI offerings.
“Given the strong demand for our existing offerings and groundbreaking opportunities such as AI, chips, robotics, and low-orbit satellites, we expect to invest approximately $200 billion in capital expenditures at Amazon in 2026 and anticipate strong long-term returns on invested capital,” said Amazon CEO Andy Jassy in a statement. In the last quarter alone, the cloud division AWS (Amazon Web Services) has concluded new contracts with numerous renowned organizations such as OpenAI, the NBA, Perplexity, Lyft, United Airlines, DoorDash, Salesforce, the US Air Force, AT&T, HSBC, and CrowdStrike.
Billions in Investments in Cloud and AI
During the conference call with investors, Jassy explained according to CNBC that the investments will “predominantly” flow into AWS, where workloads unrelated to AI are “growing faster than expected.” Nevertheless, AI remains a growth driver. “We have very high demand,” Jassy added. “Customers really want AWS for core and AI workloads, and we're monetizing capacity as fast as we can install it.”
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Financially, this is reflected in the fourth fiscal quarter, which ended in December, when cloud revenue increased by 24 percent to 35.6 billion dollars. Analysts had expected growth of 21.4 percent. According to Jassy, this was the “fastest growth in 13 quarters” for AWS. For the entirety of 2025, AWS revenue increased by 20 percent year-over-year to 128.7 billion dollars.
Retail Business Larger, but Growing Slower
The retail business is also growing, but less so than the cloud business. However, revenue here is at a significantly higher level. In the fourth quarter of 2025, Amazon was able to increase sales by 14 percent year-over-year to 213.4 billion dollars, compared to the previous year. Operating profit was increased by almost 18 percent to 25 billion dollars, while net profit simultaneously increased by only 6 percent.
For the entire last year, sales increased by 12 percent year-over-year to 716.9 billion dollars, operating profit by almost 17 percent to 80.0 billion dollars, and net profit by as much as 31 percent to 77.7 billion dollars. This is likely also due to personnel cuts. Last fall, Amazon cut 14,000 office jobs because it is relying more on AI. This continues into the beginning of this year. Amazon plans to cut another 16,000 jobs in 2026. Primarily, office jobs are affected again. Nevertheless, it still employs more than 1.57 million people, predominantly warehouse workers.
Outlook with slight revenue growth, stock falls
For the current quarter, Amazon expects revenue between 173.5 and 178.5 billion dollars, which corresponds to a year-over-year growth of 11 to 15 percent. Analysts had expected 175.6 billion dollars, so the company is meeting these expectations. Operating profit, on the other hand, is likely to be at the same level as the previous year, when it was 18.4 billion dollars. For the current quarter, Amazon expects operating profit between 16.5 and 21.5 billion dollars.
This could also have influenced investors, as Amazon's quarterly report only shows earnings per share of $1.95, while analysts had expected $1.97. After Amazon shares had already fallen by 4.4 percent during the trading day, the stock plunged by another approximately 11 percent in after-hours trading.
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