Amazon.com shares dropped sharply after the technology giant announced plans for a substantial increase in AI-related spending and reported fourth-quarter growth in its cloud-computing segment that lagged behind competitors.
The company revealed it expects to spend $200 billion in capital expenditures in 2026, marking a nearly 60% increase from the previous year and significantly exceeding Wall Street expectations. Following the announcement, Amazon shares were down approximately 8% in premarket trading.
Investor concerns reflect the broader unease surrounding surging spending on artificial intelligence. Leading tech firms including Microsoft, Meta Platforms, Alphabet’s Google, Amazon, and Oracle are all rapidly building and financing data centers to meet rising AI computing demands, with combined planned investments exceeding $700 billion in 2026. This figure is comparable to Japan’s entire 2026 budget and surpasses those of Germany and Mexico.
Market reactions to these spending plans have been mixed. Companies such as Meta and Google have been rewarded by investors due to gains in advertising and related businesses, whereas Microsoft and Amazon have faced sell-offs, reflecting apprehension about the pace at which their AI-related operations are scaling.
With data-center investment growing faster than revenue, concerns have emerged that technology companies may be expanding too aggressively. Amazon maintains that it is monetizing data-center capacity as quickly as it becomes available and expects demand to be sustained over the long term. CEO Andy Jassy said, “We have confidence that these investments will yield strong returns.”
The results capped a turbulent week for the technology sector, highlighting the intensifying AI arms race and its unpredictable impact on markets. Software companies ranging from Salesforce to Workday experienced steep declines following the release of new AI tools from startup Anthropic, which are expected to compete with existing IT solutions.
For the quarter, Amazon posted net profit of $21.2 billion, in line with analyst expectations. The company projects first-quarter operating profit between $16.5 billion and $21.5 billion, which includes $1 billion in additional costs related to its Leo satellite unit. To improve efficiency, Amazon has also cut costs by laying off 16,000 staff and closing underperforming businesses.
