Amazon stock fell sharply in after-hours trading on February 5 after the company forecast a major jump in 2026 capital spending. The move came even as the firm reported higher revenue and profit for the December quarter. Shares fell over 10% after the release.
Investors focused on the size of Amazon’s AI spending plan and its effect on cash generation. The update also arrived as large US tech firms expand AI infrastructure. Amazon also outlined higher spending for AI data centers, custom chips, and robotics.
Amazon said it expects about $200 billion in capital expenditures in 2026. Chief executive Andy Jassy cited “seminal opportunities like AI, chips, robotics, and low-earth orbit satellites,” and he said the company expects “strong long-term return on invested capital.”
Amazon linked the spending increase to AWS capacity needs. The company reported $128.3 billion in trailing twelve-month property and equipment purchases through the end of 2025.
Meanwhile, Alphabet has guided to $175 billion to $185 billion in 2026 capex, and Meta has projected $115 billion to $135 billion in capex. Estimates put combined spending by Amazon, Alphabet, Meta, and Microsoft near $660 billion.
Amazon reported fourth-quarter net sales of $213.4 billion, up 14% year over year. AWS revenue rose 24% to $35.6 billion. Operating income increased to $25.0 billion, while net income reached $21.2 billion, or $1.95 per diluted share.
Amazon said free cash flow fell to $11.2 billion for the trailing twelve months, down from $38.2 billion a year earlier. The company linked the decline to a $50.7 billion year-over-year rise in property and equipment purchases that “primarily reflects investments in artificial intelligence.”
Amazon guided first-quarter 2026 operating income to $16.5 billion to $21.5 billion and cited higher Leo satellite costs and other investments.
Also Read: Why Amazon Stock Could Soar to Record Highs in 2026
Amazon has taken steps to reduce costs alongside higher capital expenditure. The company said it will reduce its corporate workforce by about 16,000 roles, following an overall reduction of about 14,000 roles announced in October.
Amazon said most affected employees will have 90 days to seek internal roles, with severance and outplacement support for those who leave.
Amazon has also reworked parts of its grocery footprint. The company said it will close its Amazon Go and Amazon Fresh physical stores and convert some locations into Whole Foods Market sites.
Amazon said it will keep expanding online grocery delivery and plans to open more than 100 new Whole Foods stores over the next few years. The company also said it operates “Just Walk Out” checkout-free technology at over 360 third-party locations and in more than 40 North American fulfillment center break rooms.
Amazon said online grocery delivery reaches over 5,000 US cities and towns today. It plans to expand perishable delivery to more communities in 2026.
State filings in California indicate that store closures could affect 3,855 workers across 22 locations. The filings said layoffs could be completed by April 28. Amazon has said it will evaluate each site for conversion and support workers with transfers, career coaching, and severance where needed.