Amazon ups the ante on AI, and investors are worried; The stock is falling

Amazon reported revenue of $213.39 billion, above analysts’ forecasts of $211.33 billion. Earnings per share amounted to $1.95, compared to expectations of $1.97. The AWS cloud division, considered the company’s main profit engine, recorded revenues of $35.58 billion, above forecasts of $34.93 billion.

The advertising sector also presented a strong result with revenues of 21.32 billion dollars, slightly above expectations. However, investors are mainly focused on the company’s high investment forecast for the coming year, against the background of the race to expand artificial intelligence infrastructure, which raises concerns about the pressure on profitability and cash flow in the near term

The stock is down about 8% in late trading after raising its annual investment forecast. The combination between results that did not meet expectations in all sections and a forecast for higher capital expenditures strengthened investors’ concerns about pressure on profitability, and led to sharp realizations in the stock.

Regarding the current quarter, Amazon said that it expects net sales in the range between 173.5 and 178.5 billion dollars – a figure that reflects growth of 11% to 15% compared to last year and is largely in line with the average of analysts’ forecasts (according to FactSet) which stands at 175.62 billion dollars. However, the forecast for the operating profit was met with some disappointment, with the company anticipating a profit of 16.5 to 21.5 billion dollars – a range that is entirely below the consensus of analysts who expected 22.18 billion dollars.

Following Alphabet’s Wednesday forecast of between $175 billion and $185 billion in capital spending this year, Amazon now expects to spend even more. The company published a forecast for capital expenditures of $200 billion for 2026 – a figure significantly higher than the analyst consensus that expected expenditures of only $147 billion.

The reports are published at the time of stock Amazon shuffling In the last year, it almost did not rise, while the S&P 500 index jumped by more than 15%. The main reason for this is the investors’ fear of the company’s huge amount of investments in cloud infrastructure and artificial intelligence and their effect on profitability in the short term. Therefore, this time the market is not satisfied with just good numbers, but is looking for clear answers about the price that Amazon is paying on the way to the AI ​​revolution.

The Cloud at the Center: Does AWS Continue to Grow?

Amazon’s cloud growth accelerated in the fourth quarter and beat analysts’ forecasts. The company reported revenues of $35.6 billion from AWS, above the FactSet consensus of $34.9 billion, which reflects annual growth of 24% – compared to 20% in the third quarter. The figure also exceeded the “whisper” forecast of about 23%, and strengthens AWS’s status as a major growth engine for Amazon in the era of AI and the cloud.

The market is also closely following the use of the AI ​​chips that Amazon develops itself, with the aim of reducing dependence on Nvidia and lowering costs. Now, the market wants to see if these chips have been adopted on a wider scale, and if they are beginning to improve the profit margins of cloud operations.

One of the main issues in the reports is the scope of investments. In 2025, Amazon invested an amount of approximately 125 billion dollars in the establishment of data centers, servers and computing infrastructure, and market estimates speak of even higher investments in 2026. The concern is that these investments erode the company’s cash flow, even if they are designed to ensure future growth.

The fourth quarter included the holiday season and Amazon’s strongest shopping period of the year. When investors examine whether improving the delivery system and reducing logistics costs continue to maintain a competitive advantage against discount platforms such as Temu and Shein. And does the field of advertising continue to be a bright spot?

As much as the results themselves, investors focus on future projections. The main question is whether the company exudes confidence that the huge investments in AI will begin to yield clear results, or whether the pressure on the flow and profitability will continue in the coming year.