Shares of Amazon plummeted 8% following the release of its 2026 capital expenditure (capex) guidance. The company forecasted approximately $200 billion in spending, far exceeding analysts' expectations. This announcement comes as tech stocks face pressure, with investors reevaluating AI-driven growth prospects. Wall Street is wary of elevated valuations and significant spending plans from major tech firms.

Amazon's Q4 2025 earnings showed revenue of $213.39 billion, beating estimates, though the company missed profit expectations by a cent. AWS, a key driver of growth and Amazon's AI ambitions, saw a 23.6% year-over-year increase in revenue. CEO Andy Jassy cited the need for significant investment in areas like AI, chips, and satellites to fuel future expansion and innovation.

This aggressive capex plan raises concerns about free cash flow, particularly compared to peers like Microsoft and Google, which are expected to generate positive cash flow. Analysts suggest that the market may not have fully priced in Amazon's ambitious growth plans. Additionally, Amazon’s stock lagged its peers in 2024, and is not performing well this year either.

Investors are now assessing whether Amazon's investment strategy will deliver the expected returns. With the company doubling down on its cloud computing infrastructure, and retail operations, the focus remains on long-term growth. The next steps will involve monitoring Amazon's spending against its revenue projections and industry-wide trends in the tech sector.