Amazon shares crash 10% to 8-month low amid investor concerns over massive AI spending

Amazon Inc shares tumbled sharply during Friday’s session on Nasdaq, immediately after the opening bell, following the company’s mixed fourth-quarter earnings and its announcement to boost the 2026 spending forecast to $200 billion.

After over 4.4% drop in the previous session, the stock opened with a steep gap down at $200.70 and hit an intraday low of $200.30 on 6 February, down about 10% from the previous close of $222.70. Friday’s intraday low is also the lowest since May 2025, pushing the stock’s year-to-date loss to 12.5%.

The e-commerce giant on Thursday joined rivals in forecasting sharply higher expenditures this year, investing in data centres and other infrastructure to meet growing demand for artificial intelligence.

Amazon said it will spend $200 billion this year for data centres, chips, and other equipment, raising investor concerns that its massive AI bet may not yield long-term returns, Bloomberg reported.

Chief Executive Officer Andy Jassy said the spending would go “predominantly” toward Amazon Web Services (AWS), with most of it allocated for AI workloads.

The higher spending is expected to weigh on profits, with Amazon forecasting operating income for the current quarter between $16.5 billion and $21.5 billion. Analysts had, on average, estimated $22.2 billion, the report showed.

Microsoft Corp and Alphabet Inc, which reported results earlier, also increased spending beyond expectations, sending their shares lower amid concerns that AI demand may not justify the massive investments.

Overall, US tech giants now aim to pour more than $630 billion into datacenters and the AI chips that power them, an unprecedented level of investment.

Amazon December quarter performance

Looking at Amazon’s December-quarter performance, the company reported revenue of $213.4 billion, a 14% increase from the same period last year.

Amazon Web Services (AWS) revenue rose 24% to $35.6 billion, the unit’s largest quarterly growth in more than three years, the company said in a statement, with operating income for the cloud unit reaching $12.5 billion.

Advertising revenue increased 23% to $21.3 billion in the busy holiday quarter, slightly ahead of estimates. Net income for the fourth quarter was $21.19 billion, or $1.95 per share, compared to $20 billion, or $1.86 per share, a year ago.

The results come as Amazon continues to reduce its workforce. Last week, the company announced that it would lay off about 16,000 corporate employees, following roughly 14,000 cuts in October. The job reductions bring Amazon’s most recent headcount cuts to 30,000.

(With inputs from Bloomberg, Reuters)

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