Feb 5 : Amazon.com on Thursday projected a jump of more than 50 per cent in capital expenditures this year, joining its Big Tech peers in adding new expenses as they race to build out artificial-intelligence infrastructure.

It is the latest sign that tech companies will not be hitting the brakes on their hefty AI investments anytime soon. The market reacted sharply, sending shares of Amazon down as much as 11 per cent after-hours before settling at around 7 per cent down.

The company said it expects to invest about $200 billion in capital expenditures across Amazon in 2026, compared with about $131 billion in 2025.

Amazon's forecast for first-quarter operating income of $16.5 billion to $21.5 billion fell below analysts' estimate of $22.04 billion.

This guidance includes roughly $1 billion in higher costs related to its high-speed internet business Leo, as well as investment in quick commerce and sharper prices in its international stores business.

Big Tech is spending enormous amounts of money on processors, data centers and networking equipment as the companies rush to build out their AI infrastructure. The top four hyperscalers - Amazon, Microsoft, Alphabet's Google and Meta - are expected to collectively spend more than $500 billion this year.

But tech earnings over the past few days have shown that Wall Street has a clear message for tech companies: Soaring AI spending can continue only if companies show commensurate operational or financial returns.

Google's eye-popping capex forecast of $175 billion to $185 billion for the year got a pass from investors on Wednesday as the company delivered stellar growth in its cloud revenue, as did Meta's plan to spend between $115 billion and $135 billion.

But investors punished Microsoft's stock last week after its cloud unit growth just squeaked past estimates.

For Amazon, the largest cloud-services provider in the world, enterprise demand for both AI infrastructure and core digital migration workloads has been strong, even as industrywide capacity constraints limit its ability to fully meet the demand.

The company invested heavily in the fourth quarter to ease those constraints. It launched its AI infrastructure project "Rainier," bringing nearly half a million of its in-house Trainium2 chips online, primarily for use by Claude chatbot-maker Anthropic.

Although a smaller unit for Amazon, contributing just 15 per cent to 20 per cent of overall sales, cloud platform Amazon Web Services generates over 60 per cent of the company's operating profit.

Amazon has also been investing in its e-commerce business, seeking to draw more customers by expanding to rural areas in the United States, boosting its same-day and next-day delivery capabilities and deepening its push into perishable foods.

The company has been making major changes in its retail division, the latest bet being an expansion of its Whole Foods footprint and a 225,000-square-foot mega-store meant to compete with the likes of Walmart and Costco.

Amazon sees 50% boost to capital spending this year; shares tumble

Quick Overview

Key Points

Outline