Amazon Shares Slide as Rising AI Costs Overshadow Strong Cloud Revenue Beat
Seattle, Thursday, 5 February 2026.
Despite Amazon Web Services accelerating to 24% growth, shares tumbled over 7% as investors scrutinized a slight earnings miss and forecasts for aggressive infrastructure spending on artificial intelligence.
Mixed Financial Signals in Holiday Quarter
Amazon (AMZN) released its fourth-quarter financial results after the closing bell on Thursday, February 5, 2026, revealing a complex picture that sent shares sliding more than 7% in extended trading [5]. While the technology giant delivered a revenue beat driven by accelerating cloud demand, Wall Street’s enthusiasm was dampened by an earnings miss and a forecast implying significantly higher capital expenditures for the year ahead [1]. The company reported total revenue of $213.39 billion, surpassing analyst estimates of $211.33 billion [1]. This represents a beat of approximately 0.975%. However, profitability did not keep pace with the top-line expansion; earnings per share came in at $1.95, falling short of the $1.97 expected by analysts polled by LSEG [1].
Cloud Momentum Accelerates
A pivotal bright spot in the report was Amazon Web Services (AWS), which continues to benefit from the enterprise shift toward artificial intelligence. AWS revenue climbed to $35.58 billion, outpacing expectations of $34.93 billion [1]. This performance marks a significant acceleration to 24% growth, up from the 20% growth rate observed in the third quarter [5]. Advertising revenue also showed resilience, coming in at $21.32 billion against expectations of $21.16 billion, demonstrating the company’s ability to monetize its vast digital properties effectively [1].
The Cost of AI Leadership
Despite the cloud unit’s success, the capital intensity required to support AI infrastructure remains a primary concern for investors. Amazon raised its spending forecast for the year, following a trajectory where capital expenditures had already surged to $125 billion in 2025 [1][4]. Analyst models suggest these costs could swell further, potentially exceeding $150 billion in 2026 as the company invests heavily in data centers and custom chips to support generative AI workloads [4][8]. This massive outlay has pressured the stock, as markets weigh the long-term potential of AI against the immediate impact on free cash flow [4].
Operational Efficiency and Workforce
To offset these rising infrastructure costs, Amazon has continued to aggressively manage its operational efficiency. The company recently eliminated 14,000 roles in October 2025 and plans further reductions of roughly 16,000 jobs [4]. These measures highlight the delicate balancing act CEO Andy Jassy faces: funding a massive AI build-out while attempting to preserve margins and demonstrate to investors that the savings from workforce reductions will improve the bottom line without hindering long-term growth [4].