Amazon’s shares faced significant pressure in extended trading on Thursday, dropping over 7% following a disappointing earnings report that fell short of Wall Street’s expectations. The e-commerce and cloud computing giant’s forecast for capital expenditures, reflecting its aggressive investment strategy in artificial intelligence (AI) and robotics, took investors by surprise. The projected spending, which could reach as high as $200 billion this year, exceeded the $160 billion that analysts had anticipated.
This hefty spending announcement comes at a time when major tech companies are under scrutiny to show tangible returns on large investments in AI. Amazon CEO Andy Jassy expressed optimism about the company’s strategy, stating that they expect a “strong long-term return” from these investments. Jassy highlighted strong demand within Amazon’s cloud segment, which reported its fastest growth in 13 quarters, indicating that these capital expenditures would primarily benefit Amazon Web Services (AWS).
For the fourth quarter, AWS revenue grew 24% year-over-year, reaching $35.6 billion, surpassing analysts’ forecasts. However, the overall earnings per share came in slightly below expectations at $1.95. Despite the operational successes, Amazon faces pressure as analysts and investors seek assurance that massive investments in AI are yielding results.
The company also projected first-quarter revenue in the range of $173.5 billion to $178.5 billion, compared to analysts’ expectations of $175.38 billion. This cautious outlook follows similar announcements from other tech giants, including Alphabet, the parent company of Google, which also indicated plans to ramp up AI investments.
Currently, Amazon’s stock performance has been underwhelming, making it the least successful member of the so-called “Magnificent Seven” tech stocks in 2025. With shares trading around $223, the stock is significantly below Wall Street’s consensus price target of near $300, reflecting broader investor concerns about the pace of returns from substantial AI spending.
