Amazon projects $200 billion in capital spending this year

Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST

Feb 5 : Amazon.com on Thursday joined its Big Tech peers in projecting massive capital expenditures in 2026, the freshest sign yet that tech companies will not be hitting the brakes on their hefty AI investments anytime soon.

The company said it expects to invest about $200 billion in capital expenditures across Amazon in 2026, compared with an estimate of $144.67 billion, according to data compiled by LSEG.

Shares of the company fell nearly 8 per cent in extending trading after its forecast for operating income in the range of $16.5 billion to $21.5 billion in the first quarter fell below an estimate of $22.04 billion.

Big Tech is spending enormous amounts of money on processors, data centers and networking equipment as the companies rush to build out their AI infrastructure. The top 4 hyperscalers - Amazon, Microsoft, Alphabet's Google and Meta - are expected to collectively spend more than $500 billion this year.

Subscribe to our Chief Editor’s Week in Review
Our chief editor shares analysis and picks of the week's biggest news every Saturday.


This service is not intended for persons residing in the E.U. By clicking subscribe, I agree to receive news updates and promotional material from Mediacorp and Mediacorp’s partners.
Loading

But tech earnings over the past few days have shown that Wall Street has a clear message for tech companies: Soaring AI spending can continue only if companies show commensurate operational or financial returns.

Google's eye-watering capex forecast of $175 billion to $185 billion for the year got a pass from investors as the company delivered stellar growth in its cloud revenue, as did Meta's plan to spend between $115 billion and $135 billion.

But investors punished Microsoft's stock last week after its cloud unit growth just squeaked past estimates.

For Amazon, the largest cloud services provider in the world, enterprise demand for both AI infrastructure and core digital migration workloads has been strong, even as industrywide capacity constraints limit its ability to fully meet the demand.

The company invested heavily in the fourth quarter to ease those constraints. It launched its AI infrastructure project "Rainier", bringing nearly half a million of its in-house Trainium2 chips online, primarily for use by Claude chatbot-maker Anthropic.

Although a smaller unit for Amazon, contributing just 15 per cent to 20 per cent to overall sales, AWS generates over 60 per cent of the company's operating profit.

Amazon has also been investing in its e-commerce business, seeking to draw more customers by expanding to rural areas in the United States, boosting its same-day and next-day delivery capabilities and deepening its push into perishable foods.

The company has been making major changes in its retail division, the latest bet being an expansion of its Whole Foods footprint and a 225,000-square-foot mega-store meant to compete with the likes of Walmart and Costco.

Newsletter

Week in Review

Subscribe to our Chief Editor’s Week in Review

Our chief editor shares analysis and picks of the week's biggest news every Saturday.

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Subscribe here

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Download here

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Join here