On February 6, 2026, Amazon’s stock experienced a sharp decline, falling as much as 11.5% in after-hours trading and nearly 5% during regular hours. The primary trigger was CEO Andy Jassy’s “bombshell” announcement that the company plans to spend a staggering $200 billion on capital expenditures (CapEx) in 2026.
This marks a massive 54% increase over the ~$130 billion spent in 2025 and significantly exceeds the ~$146 billion analysts had projected.
1. The $200 Billion “Sticker Shock”
The market’s reaction reflects deep-seated anxiety over “Big Tech’s” spiraling AI costs. While peers like Google ($185B) and Meta ($135B) also announced massive budgets, Amazon’s $200 billion figure is the highest in corporate history.
- Where the money is going: Jassy confirmed the “bulk” of the spend is earmarked for AWS AI infrastructure, custom chips (Trainium/Graviton), robotics, and Amazon Leo (its low-earth orbit satellite constellation).
- The “Jassy Defense”: Jassy struck a defensive tone, arguing that the investment is necessary to meet “unprecedented demand” for AI. He emphasized that AWS is already monetizing capacity as fast as it can be installed.
- Cash Flow Strain: Analysts noted that $200 billion in spending would likely exceed Amazon’s operating cash flow, potentially forcing the company to dip into cash reserves or rely on debt.
2. Mixed Q4 2025 Earnings
The CapEx guidance overshadowed what was otherwise a strong operational quarter for the 2025 holiday season.
| Metric | Q4 2025 Result | Status |
| Total Revenue | $213.4 Billion | ↑ 14% (Beat estimate) |
| AWS Revenue | $35.6 Billion | ↑ 24% (Fastest in 3 years) |
| Earnings Per Share (EPS) | $1.95 | ↓ Missed ($1.97 expected) |
| Free Cash Flow | $11.2 Billion | ↓ Down 71% YoY |
- The 2-Cent Miss: While the EPS miss was small, it rattled investors who were already wary of the high spending.
- Special Charges: Profits were weighed down by $2.4 billion in one-time costs, including a $1.1 billion tax dispute settlement in Italy and $730 million in severance for 30,000 recent layoffs.
3. Strategic Retreat: The Physical Store “Reset”
As Amazon pivots toward AI and digital dominance, it is aggressively scaling back its experimental physical retail presence.
- Store Closures: Amazon announced the closure of nearly all Amazon Go and Amazon Fresh locations, resulting in a $610 million asset impairment charge.
- The Whole Foods Pivot: The company will instead double down on grocery delivery and convert some high-performing Fresh sites into Whole Foods Market locations.
4. Q1 2026 Guidance: A Cautious Outlook
Amazon’s forecast for the current quarter further dampened investor enthusiasm:
- Operating Income: Projected between $16.5B and $21.5B, trailing the consensus estimate of $22B.
- Leo Costs: The guidance includes a $1 billion cost increase specifically for the initial commercial rollout of the Leo satellite network.
Conclusion: A Test of Endurance
The 10% drop suggests that Wall Street’s patience for “growth at all costs” is wearing thin. Investors are no longer satisfied with strong top-line revenue; they are demanding a clear “path to returns” for the historic amounts of capital being poured into the AI arms race. For Amazon, 2026 has become a high-stakes test of its balance sheet endurance.
