Sharp fall in Amazon’s shares, investors worried due to announcement of spending $200 billion on AI.
highlights
- Sharp fall in Amazon’s shares, investors worried over announcement of spending $200 billion on AI.
- Company’s earnings strong in December quarter, AWS revenue increased by 24%, fastest growth in 3 years.
- Pressure on further profits, operating income estimates lower than market expectations.
Shares of American e-commerce giant Amazon Inc saw a sharp decline as soon as trading started on Nasdaq on Friday. Concern increased among investors after the company’s mixed fourth quarter (Q4) results and announcement of increasing expenses for 2026. Shares had already fallen 4.4 percent on Thursday and opened gap-down on Friday at $200.70. Shares slipped to a low of $200.30 during the day, down about 10 percent from the previous closing price of $222.70. This level is the lowest since May 2025. With this decline, Amazon shares have fallen by 12.5 percent so far in the year 2026.
Amazon will spend $200 billion on AI
According to Bloomberg, Amazon said that it is going to spend $ 200 billion on data centers, chips and other infrastructure. This investment will be made to meet the increasing demand for Artificial Intelligence (AI). However, investors fear whether such a huge expenditure will yield profits in the long run or not. Company CEO Andy Jassy said that this spend will mostly be in Amazon Web Services (AWS) and a large part of it will be deployed on AI workloads.
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Fear of pressure on profits
Amazon has estimated operating income for the current quarter at $16.5 to $21.5 billion, while the market on average was expecting $22.2 billion. Due to low estimates, the pressure on shares increased further.
Impact on other big companies too
Not only Amazon, earlier Microsoft and Alphabet (Google) had also talked about increasing expenses more than expected, after which their shares also fell. Investors are worried that the huge investments being made in AI will not yield returns that fast.
How did Amazon perform in Q4?
Amazon’s December quarter performance was mixed but overall strong. The company’s total revenue stood at $213.4 billion, which is 14 percent more than the same period last year. Cloud business Amazon Web Services (AWS) performed well, with revenue rising 24 percent to $35.6 billion, the fastest quarterly growth in the last three years. During this period, AWS’s operating income was $12.5 billion. The company’s advertising business also showed strength and revenue increased by 23 percent to $21.3 billion. Talking about profit, Amazon’s net profit in the December quarter was $21.19 billion.
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