Amazon shares dropped more than 10% in extended trading Thursday after the company reported mixed fourth-quarter earnings and announced a significant increase in its capital expenditure forecast for 2026, projecting $200 billion in spending—well above analysts’ expectations of $146.6 billion. Despite strong revenue and profit growth in key areas, the aggressive investment outlook triggered investor concern over rising costs and long-term profitability. Amazon’s net income for the quarter reached $21.19 billion, or $1.95 per share, up from $20.0 billion, or $1.86 per share, a year earlier. Revenue came in at $150.4 billion, slightly below the $151.4 billion analysts expected. However, the company’s cloud computing segment, Amazon Web Services (AWS), delivered standout results, posting a 24% year-over-year revenue increase—exceeding the estimated 21.4% growth. This marked AWS’ fastest growth in 13 quarters, driven by strong demand for both core infrastructure and AI workloads. CEO Andy Jassy emphasized that the surge in demand is fueling Amazon’s massive capital investments. “We have very high demand,” he said during the earnings call. “Customers really want AWS for core and AI workloads, and we’re monetizing capacity as fast as we can install it.” He confirmed that spending will be “predominantly” directed toward AWS, with investments focused on data centers, AI infrastructure, robotics, low Earth orbit satellites, and custom chips. The $200 billion 2026 capex forecast reflects Amazon’s strategic push to maintain its leadership in cloud computing and AI. This level of spending places Amazon among the most aggressive tech companies in the AI race. Google’s parent company Alphabet is projecting $175 billion to $185 billion in 2026 spending, while Meta expects capex to rise to between $115 billion and $135 billion—nearly double its 2023 levels. Despite AWS’ strong performance, Amazon continues to face mounting competition in the cloud market. Microsoft Azure reported 39% growth in the latest quarter, while Google Cloud saw a 48% increase—the fastest since 2021. These figures have fueled concerns that Amazon may be losing ground in the cloud race, even as it remains the market leader. Looking ahead, Amazon forecast first-quarter revenue between $173.5 billion and $178.5 billion, representing 11% to 15% year-over-year growth. Analysts had expected $175.6 billion, so the outlook was in line with expectations. Amazon’s advertising business also performed well, growing 23% year over year to $21.3 billion, underscoring its continued strength in digital advertising. The company remains in the midst of a workforce reduction, having announced plans to lay off about 16,000 corporate employees—following a previous cut of roughly 14,000 in October. As of the end of December, Amazon had 1.57 million employees globally, a 1% year-over-year increase, primarily due to its warehouse and logistics workforce. While Amazon’s core business continues to grow and its cloud unit remains a powerhouse, the sharp rise in capital spending has raised questions about how quickly the company can generate returns on its massive investments. The market’s negative reaction reflects concerns that the company’s aggressive AI and infrastructure bets may pressure margins in the near term. Still, Amazon maintains confidence in its long-term strategy. Jassy reiterated that the company expects “strong long-term return on invested capital,” emphasizing that AI-driven demand is a key catalyst for future growth. The decision to spend $200 billion over the next few years underscores Amazon’s ambition to dominate the next wave of technology, even as it navigates a challenging economic environment and growing scrutiny over its spending and workforce practices.