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Amazon shares plummeted more than 11 percent on Thursday following the company’s announcement of dramatically increased capital expenditure plans for 2026. The e-commerce and cloud computing giant revealed plans to invest approximately $200 billion in capital expenditures next year, significantly exceeding market expectations and sparking investor concerns about profitability amid aggressive AI infrastructure spending.
The company reported strong financial results for the recently ended quarter, posting a profit of $21.2 billion on net sales of $213.4 billion. Amazon Web Services, the company’s cloud computing division, generated $35.6 billion in sales during the quarter, representing a 24 percent increase compared to the same period last year.
Amazon Capital Expenditure Plans Surpass Analyst Forecasts
Amazon’s projected capital expenditure of $200 billion for 2026 represents a substantial increase from analyst predictions. Market analysts had previously forecast that Amazon capital expenditure would reach approximately $147 billion in 2025, with much of that spending directed toward artificial intelligence initiatives.
Chief Executive Andy Jassy explained the rationale behind the elevated spending plans during an earnings call. “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 $200 billion in capital expenditures across Amazon in 2026,” Jassy said.
AI Infrastructure Drives Investment Strategy
The aggressive investment strategy reflects Amazon’s determination to maintain its competitive position in the rapidly evolving artificial intelligence landscape. Like other tech giants including Microsoft and Google, Amazon is making massive investments to capture market share in the AI revolution.
However, the scale of the spending commitment appears to have rattled investors who are increasingly scrutinizing the returns on AI infrastructure investments. The sharp stock decline suggests concerns that the elevated Amazon capital expenditure may pressure margins and delay profitability improvements.
Amazon is particularly banking on AWS performance to justify these investments. The cloud computing platform remains the world’s leading provider but faces intensifying competition from fast-growing rivals Microsoft Azure and Google Cloud.
Cloud Computing Demand Fuels Expansion
According to Jassy, customer demand for AWS services remains exceptionally strong. “We have very high demand; customers really want AWS for core and AI workloads,” he stated during the earnings call.
The CEO emphasized the company’s capacity constraints in meeting market demand. “We’re monetising capacity as fast as we can install it,” Jassy noted, suggesting that infrastructure expansion is necessary to capture available revenue opportunities.
Additionally, Amazon’s investment plans extend beyond traditional cloud computing infrastructure. The company is directing significant resources toward semiconductor development, robotics technologies, and satellite communications through its Project Kuiper low-earth orbit satellite initiative.
Market Reaction Reflects Growth Investment Concerns
The steep share price decline underscores investor apprehension about the timeline for returns on these substantial capital investments. Meanwhile, competitors are making similar large-scale commitments to AI infrastructure, intensifying the race for market dominance in cloud-based AI services.
In contrast to the stock market reaction, Amazon’s core business fundamentals remained robust in the recent quarter. The company’s retail operations, advertising business, and chip development initiatives all contributed to strong overall sales performance.
Amazon has not provided detailed timelines for when these infrastructure investments will translate into proportional revenue growth or improved profit margins. The company’s ability to meet elevated investor expectations while managing unprecedented capital expenditure levels will likely determine market sentiment in coming quarters.
