News: Amazon Projects $200B Capex, Expects Strong Returns
Amazon reported fourth-quarter 2025 financial results on February 5, 2026, and simultaneously announced plans to increase capital expenditures to approximately $200 billion in 2026, driven primarily by investments in artificial intelligence (AI) infrastructure, custom chips, robotics and space-related technologies, as the company said it expects significant long-term return on invested capital from these outlays.
Amazon’s Earnings and Capital Expenditure Outlook
Amazon’s fourth-quarter earnings released Thursday showed total revenue of $213.4 billion, up roughly 14 % from the prior year, led by growth in its Amazon Web Services (AWS) cloud segment, which posted 24 % year-over-year revenue growth to $35.6 billion. The company reported adjusted earnings per share of $1.95, slightly below analysts’ expectations, while revenue marginally exceeded forecasts.
Alongside these results, Amazon projected capital expenditures of about $200 billion for 2026, a substantial increase from around $131 billion in 2025 and significantly above Wall Street expectations of roughly $146 billion.
Management stated this capex guidance encompasses investments across AWS, AI-related compute infrastructure, custom chips designed for machine learning workloads, robotics, and low-Earth orbit satellite technology.
CEO Andy Jassy emphasized that, based on current demand signals, the company anticipates strong long-term return on invested capital from these expenditures, reflecting expected customer adoption and utilization of expanded capabilities, particularly within AWS.
Despite the revenue and cloud unit performance, investor response was negative on markets, with Amazon’s share price falling sharply in after-hours trading following the earnings and spending announcement, as investors weighed the scale of the spending and its implications for near-term profitability.
Focus on AI, Custom Chips, and Space Infrastructure
A key driver of Amazon’s elevated capex guidance is its strategic emphasis on artificial intelligence infrastructure, including expanded data centers and cloud compute capacity. Amazon has developed its own custom AI silicon, notably Trainium and Graviton processors, which the company deploys within AWS to support machine learning workloads and to improve price-performance for customers.
Management noted strong demand for these chips, with earlier generations like Trainium2 widely subscribed, and continued development of subsequent versions intended to deliver greater compute performance.
Investment also extends to AWS service offerings, which provide the backbone for AI and enterprise workloads. The company’s expanded AWS infrastructure is designed to capture increasing customer demand for AI-enabled applications, enterprise cloud services, and specialized workloads.
In addition to data centers and AI hardware, Amazon’s 2026 capex plan includes funding for robotics automation and satellite technologies, including its Project Kuiper low-Earth orbit broadband initiative. These investments align with Amazon’s broader strategic aim to enhance operational efficiency and expand its technological ecosystem beyond traditional e-commerce and cloud services.
Market Reaction and Investor Concerns
The magnitude of the capex projection spurred a negative market reaction, with Amazon’s stock sliding in extended trading as investors assessed the implications of such heavy spending for near-term profitability. Analysts noted that while AWS continues to be a high-growth and high-margin segment, the lag between capex deployment and revenue realization for advanced infrastructure can apply pressure to free cash flow and earnings metrics in the short term.
Investor concerns were compounded by Amazon’s forecast for first-quarter 2026 operating income, which came in below consensus estimates, further highlighting the financial trade-offs associated with large capital commitments. Despite these concerns, management reiterated confidence in the company’s ability to convert investment into scalable revenues over time.
Competing technology firms, including Alphabet, Microsoft and Meta Platforms, are also increasing their capital expenditures to expand AI and cloud infrastructure in 2026, contributing to a broader industry trend of elevated spending on compute capacity and advanced technologies.
AWS Performance and Strategic Priorities
AWS remains a central pillar of Amazon’s financial performance, contributing a disproportionate share of operating income relative to its share of overall revenue. Growth in AWS revenue has been a consistent driver, with the fourth quarter representing the fastest pace in over a year, a factor cited by management in support of continued investment.
Beyond AI infrastructure, Amazon reported growth across several business segments, including advertising, which saw elevated year-over-year gains. The company also outlined operational shifts, such as the closure of certain physical retail formats and expansion of services like rapid delivery offerings.
Overall, Amazon’s current financial reporting period reflects a combination of solid top-line growth, aggressive capital deployment, and investor focus on how large infrastructure investments will translate into sustainable returns for shareholders.
