(Feb 6): Amazon.com Inc said it plans to spend US$200 billion ($255.17 billion) this year on data centers, chips and other equipment, worrying investors the company’s colossal bet on artificial intelligence will pinch profits while it waits for investments to pay off. The shares fell in extended trading.
The company reported spending roughly US$130 billion on property and equipment in 2025. Analysts anticipated those expenses would reach about US$150 billion this year.
“With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites, we expect to invest about US$200 billion in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital,” chief executive officer Andy Jassy said in a statement.
The spending will weigh on profit, with Amazon giving a forecast for operating income in the current quarter of US$16.5 billion to US$21.5 billion. Analysts, on average, estimated US$22.2 billion.
The shares dropped about 7% in extended trading, after closing at US$222.69 in New York. Amazon’s stock had declined 3.5% this year through the Thursday close.
Microsoft Corp and Alphabet Inc, which reported results earlier, also spent more heavily than anticipated, sending their shares down amid mounting worries that demand for AI services doesn’t warrant the massive outlays.
See also: Traders pile into tech hedges as rout in software stocks deepens
Fourth-quarter revenue generated by Amazon Web Services, the company’s cloud unit, rose 24% to US$35.6 billion. AWS’s operating income was US$12.5 billion.
“The negative reaction is a result of bigger increases to capex than to AWS revenue,” said Gil Luria, an analyst at DA Davidson & Co. “Much like Microsoft, investors are concerned that investments are growing faster than returns, and that Amazon, Google and Microsoft are locked in an escalating build-out that may not work out for all of them.
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