Amazon shares plummeted Thursday evening after the tech giant revealed a $200 billion capital expenditures plan for this year. Additionally, management’s current quarter profit forecast miss overshadowed what was otherwise a generally good final quarter of 2025. Revenue increased 14% year over year to $213.39 billion, beating expectations for $211.33 billion, according to estimates compiled by LSEG. Earnings per share based on generally accepted accounting principles (GAAP) increased 5% to $1.95, missing the $1.97 estimate, per LSEG. Operating income increased 18% year over year to $24.97 billion, beating the $24.77 billion consensus forecast. Amazon’s operating income included three special charges that negatively impacted operating income by about $2.4 billion. Why we own it Amazon may be widely known for online shopping, but its cloud business is the real breadwinner. Advertising is another fast-growing business with high margins. Investment in robust e-commerce logistics infrastructure makes its online storefront the place to be. Prime leverages free shipping and video streaming with tons of other perks to keep users paying every month. Competitors : Walmart , Target , Microsoft , and Alphabet Most recent buy : April 15, 2025 Initiated : February 2018 Bottom line Let’s break down why Amazon shares were falling nearly 11% in after-hours trading, extending a slump that has been market-wide with the Magnificent Seven and other tech stocks selling off this week. Here’s the thing: the reported fourth quarter of 2025 was actually solid. The bulls wanted to see Amazon Web Services revenue growth accelerate, and the company delivered. The segment reported revenue growth of roughly 24% and added about $7 billion in revenue year over year. The cloud segment also delivered better-than-expected margins, a great achievement because management has to balance profitability with investments. It’s a sign of virtually no wasted capacity. Whatever is added is being used. The company’s North America and International units also posted year-over-year margin expansion when excluding certain charges in the quarter. So, why is the market rebelling against Amazon? With management aiming for $200 billion capex spend this year — about $50 billion more than analysts had forecasted — Wall Street is concerned that those investments won’t be monetized and flow into profit quickly enough. AMZN 5Y mountain Amazon 5 years We’ve seen other Mag 7 companies talk about ramping up investments this earnings season — including fellow portfolio names Meta Platforms and Alphabet , which both got passes. Why isn’t Amazon? The market took issue with the higher costs that were not accompanied by more upside in the 2026 first-quarter revenue and profit guidance. If you’re going to spend more than anyone was anticipating, it’s got to be backed by higher returns. Still, Amazon isn’t wasting this capital, investing in the future and wouldn’t be spending this money if the demand…
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