Amazon eliminated 16,000 corporate jobs last week and days later committed to spend about $200 billion on artificial intelligence and related infrastructure, a pairing that rattled investors and sent the company's shares down more than 10% in after-hours trading. The disclosure came with fourth-quarter results that beat revenue expectations but delivered a capital-expenditure figure far above Wall Street forecasts.
The spending pledge, outlined alongside earnings, marked a sharp escalation from prior guidance. Analysts tracked by FactSet had estimated 2026 capital spending of roughly $146.6 billion, compared with the $200 billion Amazon said it plans to invest, up from about $131 billion in 2025. The gap-about $54 billion-quickly became the focus of market concern.
Amazon's fourth-quarter performance was solid on the surface. Revenue rose 14% from a year earlier to $213.4 billion, topping the $211.3 billion consensus estimate compiled by LSEG. Amazon Web Services posted 24% growth, its fastest pace in 13 quarters, with revenue of $35.6 billion, while advertising revenue climbed 23% to $21.3 billion, according to CNBC.
Yet profits and guidance disappointed. Amazon missed earnings-per-share estimates by one cent, posting $1.95 versus the $1.97 analysts expected. First-quarter operating income guidance of $16.5 billion to $21.5 billion came in below the $22.2 billion consensus, reinforcing fears that near-term margins will be pressured by data-center construction and AI chip investments.
Chief Executive Andy Jassy defended the scale of spending in the earnings release, saying, "With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low-earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026." He added that non-AI workloads on AWS were "growing at a faster rate than we anticipated," and noted that custom Trainium and Graviton chips generate more than $10 billion annually.
The investment push arrived amid deep workforce reductions. The latest 16,000 layoffs follow about 14,000 cuts announced in October, bringing total corporate job losses since then to roughly 30,000, or about 10% of Amazon's 350,000 corporate employees. Beth Galetti, senior vice president of people experience, said the company was "reducing layers, increasing ownership, and removing bureaucracy." U.S.-based employees have 90 days to find internal roles or face severance.
The juxtaposition has amplified scrutiny of Big Tech's AI spending race. Alphabet has signaled up to $185 billion in capital expenditures this year, while Meta could spend as much as $135 billion. Microsoft reported a 66% year-over-year jump in quarterly capital outlays, according to GeekWire. Combined, the sector is on track to invest more than $500 billion in AI infrastructure in 2026.
Economic studies cited by the Associated Press have warned that higher-paying roles in engineering and corporate management are among those most exposed to generative AI, adding to worker anxiety as companies automate. Investors, meanwhile, are increasingly differentiating between firms that can pair spending with earnings growth and those whose profit outlook becomes cloudier with each incremental billion committed.
