"Investors are worried Amazon is spending too much on artificial intelligence Amazon reported fairly strong financial results in the fourth quarter, despite narrowly missing the consensus estimate on the bottom line. Revenue rose 14% to $213 billion, an acceleration from 13% last year, driven by particularly strong sales growth in advertising and cloud computing services, as detailed below: E-commerce (first-party): 10% E-commerce (third-party): 11% Advertising: 23% Amazon Web Services: 24%"
"While the bottom-line miss factored into the stock's nine-day losing streak, investors are more worried about Amazon's plans to spend $200 billion on capital expenditures in 2026, primarily to support the development of artificial intelligence (AI) infrastructure. If that estimate is accurate, capital expenditures will increase 56% from $128 billion in 2025, after increasing 64% from $78 billion in 2024."
Amazon stock is down 14% year-to-date and has declined in nine consecutive trading sessions, the longest losing streak since July 2006. Revenue rose 14% to $213 billion in the fourth quarter, accelerating from 13% the prior year, driven by advertising and cloud services. E-commerce first-party sales increased 10%, third-party 11%, advertising 23%, and Amazon Web Services 24%. GAAP net income rose 5% to $1.95 per diluted share, while $2.4 billion in one-time charges reduced operating income; excluding those charges, operating income would have increased 30%. The company plans $200 billion in capital expenditures for 2026 to support AI infrastructure, a 56% increase from 2025, and CEO Andy Jassy cited strong demand for AI services, custom chips, and robotics. Analysts show no sell ratings and a median $285 price target implying roughly 43% upside from the current share price.
Read at The Motley Fool
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