Key points
- Capital expenditure forecast raised to $200 billion
- AWS revenue jumps 24% year-on-year growth
- Heavy AI investment worries investors despite profits
- Amazon plans cutting 30,000 office jobs globally
SAN FRANCISCO, United States: Amazon shares plunged more than 11 percent on Thursday despite strong quarterly sales and profits, as investors reacted nervously to a sharp increase in the company’s spending outlook.
The e-commerce and cloud computing giant reported a profit of $21.2 billion on net sales of $213.4 billion for the recently ended quarter, driven by solid performances across its AWS cloud unit, retail operations, advertising, and chip businesses.
Amazon chief executive Andy Jassy said the company expects to invest around $200 billion in capital expenditures in 2026, citing strong demand and major opportunities in artificial intelligence, chips, robotics, and low-earth orbit satellites. Analysts had earlier forecast capital spending of about $147 billion, largely linked to AI initiatives.
AWS Growth Powers Revenue, Fuels Spending
Amazon Web Services (AWS) posted quarterly sales of $35.6 billion, marking a 24 percent increase from a year earlier. Jassy said demand for AWS remains very strong, particularly for core cloud and AI workloads, adding that the company is monetizing new capacity as quickly as it can deploy it.
AWS, the world’s leading cloud computing provider, is locked in an intense race with Microsoft Azure and Google Cloud, as all major players pour billions into expanding AI-driven infrastructure. Industry executives have warned that demand for AI services is currently outpacing available supply.
Job Cuts and Investor Concerns
Despite robust growth, investors remain cautious about the soaring costs tied to AI expansion. Like Alphabet and Microsoft, Amazon has seen its share price pressured even as earnings beat expectations, reflecting concerns over heavy capital investment.
Amazon also announced plans to cut 16,000 jobs worldwide, following earlier plans to eliminate 14,000 positions. The restructuring aims to reduce bureaucracy and redirect resources toward AI initiatives. The total reduction of 30,000 roles would represent nearly 10 percent of Amazon’s office workforce, while its broader employee base of 1.5 million is largely made up of warehouse and delivery staff.
Analysts noted that Amazon’s core e-commerce business remained resilient during the year-end holiday season, aided by operational efficiency and faster deliveries, while its AI-powered shopping assistant “Rufus” is gaining traction and supporting online sales growth.
