Amazon shares tank on investor jitters over AI spending
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STORY: Amazon shares plunged in after-hours trade Thursday, falling around 11%.The tumble came after it projected a surge of more than 50% in capital expenditures this year.The e-commerce giant plans to pump $200 billion into its AI efforts in 2026, joining other tech giants in a spending spree to build out artificial-intelligence infrastructure.That has some investors worried about returns on the investment. Amazon Web Services' revenue grew to $35.6 billion in the December quarter.While that marked a rise of 24%, the pace of increase was slower than rivals like Google and the figure was overshadowed by the company's capital spending surge.Speaking to analysts, Chief Executive Andy Jassy said it was easier for smaller competitors to post stellar growth rates. But the numbers will concern investors, with AWS accounting for over 60% of the firm's operating profits. The results are the latest sign that Big Tech will not be halting AI investments any time soon. The top four so-called 'hyperscalers' - Amazon, Microsoft, Google and Meta - are expected to collectively spend more than $630 billion this year.One analyst told Reuters that "Amazon has to invest at these levels just to stay in the race."But this week's earnings suggest Wall Street has a message for tech titans: keep spending if you like, but we want to see signs that returns are coming.
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STORY: Amazon shares plunged in after-hours trade Thursday, falling around 11%.The tumble came after it projected a surge of more than 50% in capital expenditures this year.The e-commerce giant plans to pump $200 billion into its AI efforts in 2026, joining other tech giants in a spending spree to build out artificial-intelligence infrastructure.That has some investors worried about returns on the investment. Amazon Web Services' revenue grew to $35.6 billion in the December quarter.While that marked a rise of 24%, the pace of increase was slower than rivals like Google and the figure was overshadowed by the company's capital spending surge.Speaking to analysts, Chief Executive Andy Jassy said it was easier for smaller competitors to post stellar growth rates. But the numbers will concern investors, with AWS accounting for over 60% of the firm's operating profits. The results are the latest sign that Big Tech will not be halting AI investments any time soon. The top four so-called 'hyperscalers' - Amazon, Microsoft, Google and Meta - are expected to collectively spend more than $630 billion this year.One analyst told Reuters that "Amazon has to invest at these levels just to stay in the race."But this week's earnings suggest Wall Street has a message for tech titans: keep spending if you like, but we want to see signs that returns are coming.