Azernews.Az

by Alimat Aliyeva

Shares of U.S. technology giant Amazon fell after the company announced plans to allocate around $200 billion in capital expenditures in 2026, a significant portion of which is expected to be directed toward the development of artificial intelligence technologies, Azernews reports.

Following these statements, Amazon shares dropped by nearly 10% during after-hours trading on February 5 on the Nasdaq exchange. By the close of the regular trading session, the stock ended at $222.69, down 4.4% from the previous level.

Despite strong overall financial results for the fourth quarter, investors were unsettled by the sheer scale of the planned spending. Market participants increasingly fear that investments in AI are growing faster than their returns, and that not all tech giants will ultimately succeed in the intensifying race for leadership in the sector.

Amazon forecasts capital expenditures of approximately $200 billion in 2026, significantly above the $146.6 billion expected by analysts surveyed by CNBC. For comparison, the company’s capital spending in 2025 amounted to about $131 billion. Amazon CEO Andy Jassy said the company sees a “unique opportunity” to scale its AWS business and cloud division, prompting aggressive investment with the expectation of substantial long-term returns.

Some of the funds will be used to develop a satellite project designed to compete with Starlink, further automate deliveries through robotics, and expand the Whole Foods store network. However, the majority of the investment will go toward expanding computing capacity for customers working with artificial intelligence, reflecting surging demand for AI-related infrastructure.

AWS revenue grew 24% year-over-year in the fourth quarter to $35.6 billion, marking the fastest quarterly growth rate in the past three years. The total size of AWS’s order backlog reached $244 billion, up 40% year-on-year, underscoring the division’s strong momentum.

Amazon’s total revenue for the fourth quarter of 2025 rose 14% to $213.4 billion, while net income reached $21.2 billion, or $1.95 per share. The company’s core e-commerce segment remains the primary revenue driver, with sales increasing 10% to $83 billion. Meanwhile, Amazon’s advertising business continued to gain traction, posting 23% growth to $21.3 billion, and is increasingly viewed as one of the company’s most profitable segments.

At the same time, Amazon continues to streamline costs. In January, the company laid off 16,000 employees, bringing the total number of job cuts to 30,000, as previously announced. The contrast between massive AI investments and workforce reductions highlights a broader trend in the tech industry, where companies are betting heavily on automation and artificial intelligence even as they seek to improve efficiency and protect margins.