Amazon’s Strong Q4 Performance and $200 Billion Investment Plans

Amazon achieved record quarterly revenue in Q4, with strong cloud growth. However, the stock dipped over 10% in after-hours trading due to missing profit expectations and plans to invest $200 billion in capital expenditures in the upcoming year.

CEO Andy Jassy stated, “With such strong demand for our offerings and opportunities like AI, chips, robotics, and satellites, we plan to invest $200 billion in capital expenditures in 2026, expecting a strong return on investment.”

This investment surpasses analyst predictions and is an increase from the $125 billion estimated for 2025.

Tech companies are closely monitoring infrastructure spending amidst the AI boom. Google and Meta have also announced significant capex increases, while Microsoft’s capital spend surged 66% year-over-year.

Amazon’s capex includes expanding its e-commerce fulfillment network, predominantly in AWS as stated by Jassy. The company aims to meet the growing demand for AI services.

Key takeaways from Amazon’s Q4 report include:

• Q4 revenue reached $213.4 billion, exceeding $200 billion for the first time.
• Earnings per share were $1.95, slightly below estimates, with net income at $21.2 billion.
• AWS reported $35.6 billion in sales, growing at the fastest rate in three years.
• Online store sales increased by 10% to $83 billion, facing competition from Walmart.

Amazon’s market cap stands at $2.4 trillion, with a slight decrease in stock performance over the past year.

The company’s call with analysts did not address the recent announcement of 16,000 job cuts.

Further details from Amazon’s Q4 earnings report:

Advertising: Revenue from the ad business grew to $21.3 billion, a 23% increase from the previous year.

Third-party seller services: Revenue from third-party sellers rose by 11% to $52.8 billion.

Shipping costs: Amazon’s spending on shipping reached $31.5 billion in Q4, a 10% increase.

Physical stores: Revenue from physical stores, including Whole Foods, totaled $5.8 billion, up 5%.

Headcount: Amazon employs 1.58 million people, slightly down from the previous quarter.

Prime: Subscription services revenue, including Prime memberships, was $13.1 billion, up 14%.

Guidance: Q1 sales are expected to range between $173.5 billion and $178.5 billion, with operating income projected between $16.5 billion and $21.5 billion.