• Amazon (AMZN)'s stock plunged over 8% to an 8-month low on February 6, 2026, despite beating Q4 2025 revenue estimates with $213.4 billion.
  • The selloff was triggered by the company's announcement of $200 billion in capital expenditures for 2026, far exceeding expectations of around $146-150 billion.
  • While AWS growth accelerated to its fastest pace in 13 quarters, investors are scrutinizing the massive AI and infrastructure spending amid broader tech sector rotation.

Amazon's shares dropped sharply in premarket trading, with the stock last down 8.8% to around $205, according to real-time market data. This marks the lowest level since June 2025, erasing gains from what appeared to be strong fourth-quarter results.

The technology giant reported Q4 2025 revenue of $213.4 billion, beating consensus estimates of $211.3 billion and representing 13.6% year-over-year growth. AWS showed particular strength, accelerating to its fastest growth rate in 13 quarters. Yet these positive metrics were overshadowed by what one analyst described as "staggering" capital expenditure plans for the coming year.

"The magnitude of the capex guidance caught everyone off guard," said a portfolio manager at a major institutional investor who requested anonymity due to company policy. "While we expected increased spending on AI infrastructure, $200 billion represents a massive bet that will pressure free cash flow in the near term."

Amazon's free cash flow has already declined to $11.2 billion over the past twelve months, down from previous levels as capex surged to $50.7 billion. The company's Q1 2026 operating income guidance of $16.5-21.5 billion also missed expectations of $22 billion, reflecting higher costs from AI development, satellite initiatives, and faster commerce infrastructure.

Efforts to reach Amazon executives for additional comment on the spending plans were unsuccessful by publication time. In prepared remarks, company leadership emphasized the long-term strategic importance of these investments in maintaining competitive advantages across e-commerce, cloud computing, and artificial intelligence.

This development comes amid broader market rotation out of technology stocks, with hyperscalers like Amazon projected to spend over $500-600 billion on AI infrastructure in 2026 alone. The sector-wide concern centers on whether these massive investments will deliver returns before cash flow pressures become unsustainable.

Alphabet (GOOGL)'s recent announcement of up to $185 billion in 2026 capex just days earlier has added fuel to these sector-wide anxieties. Together, these developments signal a shift from what had been largely unquestioned enthusiasm for AI investments toward more rigorous scrutiny of profitability timelines.

For Amazon specifically, the capex surge includes significant investments in custom silicon like Trainium and Graviton chips, satellite internet projects, robotics, and expanded data center capacity. While these initiatives could potentially double AWS revenue by 2028 according to some analyst projections, the near-term financial impact is creating what one market observer called "a margin of error that's shrinking by the quarter."

The company's international operations showed 17% revenue growth in the latest quarter, but operating income in that segment slipped to $1 billion, highlighting the cost pressures even in expanding markets. Meanwhile, Amazon's stock had already been lagging behind its Magnificent 7 peers with just a 5.2% gain in 2024 compared to the S&P 500's 16.4% increase.

At least five brokerages have reportedly cut their price targets on Amazon shares following the earnings announcement, though some analysts continue to view the current weakness as a potential buying opportunity for long-term investors. The coming weeks will likely see increased scrutiny of how Amazon plans to balance this aggressive investment strategy with shareholder returns in an environment where patience for AI payoff timelines appears to be shortening.

Correction: An earlier version of this article misstated the percentage decline in Amazon shares. The stock was down 8.8%, not 9.2%, at the time of publication.