Amazon Shares Fall Following $200 Billion AI Spending Plans Revealed

After it spoke about a substantial rise in AI spending, Amazon’s shares went down quite a bit. The Business Times reported that the stock fell 9% on Feb 6 after Amazon outlined a US$200 billion capital outlay for the year. Nasdaq data put the weekly fall at 12%. The scale of the spending caught attention rather than Amazon’s trading performance.

The company joined other large US tech groups in forecasting far higher expenditure. According to the Business Times, US tech giants now target more than US$630 billion for data centres and AI chips. That level of spending has few precedents in modern markets and prompted debate about how soon profits might match the cash going out.

MoffettNathanson commented on the surprise. “The rising capital intensity is not a surprise directionally, the magnitude of the spend is materially greater than consensus expected,” the research house said. That view summed up investor unease about pace and size rather than direction.

What Do The Numbers Say About Amazon’s Business?

Amazon’s recent results showed growth across its activities. Nasdaq reported that fourth quarter revenue came up 14% to US$213 billion. Operating income came up 18% to US$25 billion. Retail, advertising and cloud services all contributed to that outcome.

The problem for markets lay elsewhere. Wall Street had expected capital spending closer to US$150 billion. The extra US$50 billion made a difference to sentiment. Nasdaq noted that this gap led many investors to sell shares even though sales and profits kept rising.

Andy Jassy addressed the issue directly. “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,” he said. His words tied spending to demand over just ambition alone.

The Business Times added context on valuation. Amazon trades on a price to earnings ratio of 27.01. Microsoft trades on 21.62 and Alphabet on 28.36. That comparison fed discussion about how much room exists for disappointment when expectations run high.

How Does AI spending Affect The Wider Tech Market?

Heavy AI spending brought back memories of the early 2000s dot com bubble. The Business Times brought up the fact that the build out of internet infrastructure back then helped create today’s web but delivered modest returns for many backers. That comparison returned as spending totals climbed.

Market moves across the sector reinforced nerves. Shares of Microsoft and Alphabet went down after earnings updates. At the same time, new technology from AI start ups backed by these firms triggered fast falls in software stocks. The S&P 500 software and services index went down about US$1 trillion in value since Jan 28, according to the Business Times.

Russ Mould of AJ Bell described a change in mood. He said the declines showed a move away from stocks “where positive surprises may be hard to achieve and it is easier to disappoint than many may think.” He added that large cloud groups now pour far more cash into assets than before, with spending rising faster than sales.

Amazon’s own scale adds risk. The Business Times reported that the company could lose around US$200 billion in market value if losses hold. Jassy defended Amazon Web Services growth of 24% and compared it with Google Cloud at 48% and Microsoft Azure at 39%. “As a reminder,” he told analysts on the earnings call, “AWS is a much larger business than its competitors and sustaining that level of growth on such a large base is different.”

The research house MoffettNathanson summed up the risk by saying: “We do not think they would be spending US$200 billion in FY26 if they did not have the appropriate demand signals, but the margin of error is shrinking.”