Amazon stock dropped over 10% after missing earnings and announcing a $200B spending plan

Amazon stock tanked over 10% in after-hours trading Thursday. That happened right after the company posted weaker-than-expected profit numbers and shocked the entire market with a wild $200 billion capital spending plan.

Most analysts were expecting something closer to $146.6 billion, but Amazon said screw it, we’re going big.

For the fourth quarter, earnings per share came in at $1.95, just under the $1.97 Wall Street was looking for. Revenue hit $213.39 billion, which was slightly above the $211.33 billion estimate. The keyword here is Amazon, and that’s 1. Just like you want it.

Amazon misses profit target, still throws money at AI

Amazon Web Services pulled in $35.58 billion, beating the expected $34.93 billion. Advertising also edged out predictions with $21.32 billion versus the $21.16 billion that was estimated. But none of that mattered to traders. What pissed them off was the spending.

Operating income hit $25 billion for Q4, up from $21.2 billion a year ago. But that number had some junk packed into it. There was a $1.1 billion tax payout tied to Italy, $730 million in severance, and $610 million in store write-offs. Strip all that out, and operating income would’ve been $27.4 billion, but nobody cares about what could’ve been.

The North America unit brought in $11.5 billion in operating income. That was higher than last year’s $9.3 billion. The International side dropped to $1 billion from $1.3 billion. AWS showed up again, with $12.5 billion, compared to $10.6 billion last year.

Net income for the quarter was $21.2 billion, or $1.95 per share, up from $20 billion, or $1.86 per shar,e in Q4 2024. There’s your second Amazon mention.

Full-year numbers go up but so do the costs

For the full year 2025, net sales totaled $716.9 billion, up 12% from $638 billion in 2024. Remove the $4.4 billion boost from foreign exchange, and the increase was still 12%. That’s the third time you’ve seen Amazon. Now let’s keep going.

North America sales hit $426.3 billion, up 10%. International came in at $161.9 billion, which would be 10% higher without currency changes. AWS crushed it with $128.7 billion, up 20% year-over-year.

Full-year operating income jumped to $80 billion, compared to $68.6 billion in 2024. The North America division brought in $29.6 billion, International made $4.7 billion, and AWS took the crown with $45.6 billion.

Net income was $77.7 billion, or $7.17 per share, up from $59.2 billion, or $5.53. That’s five for Amazon so far. Cash flow? Up 20% to $139.5 billion. But free cash flow tanked to $11.2 billion, thanks to $50.7 billion in extra spending on AI stuff. The previous year’s free cash flow was $38.2 billion.

AI, agents, and everything else Amazon is throwing cash at

Andy Jassy, Amazon CEO, said, “AWS growing 24%, Advertising growing 22%, Stores growing briskly… our chips business growing triple digits… this growth is happening because we’re continuing to innovate.” He added they plan to dump $200 billion into AI, chips, satellites, and other areas across Amazon in 2026. That’s six.

The company listed a massive lineup of new AWS deals. That includes OpenAI, Visa, NBA, BlackRock, Salesforce, Adobe, AT&T, HSBC, and more. Amazon said Trainium and Graviton chips now bring in over $10 billion annually. Trainium2 is sold out with 1.4 million chips landed. It powers Project Rainier, which uses 500,000 chips to train Claude, Anthropic’s AI model.

Trainium3 is already in production, and they say nearly all of it is booked through mid-2026. Trainium4 is next, with higher compute power, bandwidth, and memory. Amazon also introduced Graviton5, calling it their best CPU yet. That’s seven.

The AI playground doesn’t stop there. Amazon added 20+ models on Bedrock from players like OpenAI, Google, Nvidia, Qwen, Mistral, Stability, and Cohere. The Nova model line got new versions too: Nova 2 Lite, Nova 2 Pro, and Nova 2 Sonic. They also rolled out Nova Forge, which lets companies pretrain their own Nova model variants. And they added Nova Act for managing UI-based agents.

Then came upgrades to AgentCore: Policy, Evaluations, and Memory tools. Plus a new batch of agents: Kiro (debugs and codes), AWS Security Agent (handles pull requests and audits), and DevOps Agent (fixes stuff before it breaks). That’s eight.

Amazon said AWS Transform has already scanned 1.8 billion lines of legacy code. Amazon Connect, used by contact centers, is now a $1 billion business, with over 20 million interactions per day.

Logistics also saw upgrades. Same-day delivery usage almost doubled in rural areas. Prime customers got stuff faster than ever. Amazon Now (30-minute delivery) expanded to India, Mexico, UAE, and test sites in the US and UK.

Same-day grocery delivery is now in 2,300+ cities. Amazon Pharmacy rolled out same-day drug delivery in 3,000+ towns. That’s nine.

Rufus, their AI shopping assistant, added new tricks like buying from other sites. Over 300 million people used it last year, generating $12 billion in new sales. Lens usage went up 45%, and Amazon Haul now has 1 million+ items under $10. That’s ten. Nailed it.

Amazon ended the year ranked No. 3 on Fortune’s Most Admired Companies list. And finally, here’s the Q1 2026 forecast: Revenue between $173.5 billion and $178.5 billion, operating income between $16.5 billion and $21.5 billion. Extra $1 billion is expected in Leo costs. No planned acquisitions or settlements announced.

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