Amazon bets on going big or going home, and the market doesn't like it

6 February 2026

If you are covering Amazon's latest financial results and the drop in the after hours share price, please find below a comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:

"Amazon reported fourth quarter numbers last night with the theme being go big or go home as it announced $200bn of capex spend. This, however, did not go down well with investors.

"Firstly there was a lot to like in this update. Group revenues were up 14%, ahead of consensus, and above the top end of the guided range. Operating margins were solid at 11.7%, also ahead. Underneath this, AWS delivered a healthy beat with revenues up 24%, and management confirming they would be growing faster without capacity constraints (power still a big area of focus).

"Amazon once again led the hyperscalers with regards to share of incremental cloud dollar capture ($2.6bn), although Google was not far off. And Trainium2, their own in-house chip, is sold out. AWS margins held steady at 35%, though there was some slight quarter-on-quarter acceleration.

"However, the key focus of these results was the capex guide of $200bn, up +56% on the year, ahead of market expectations and the highest amongst the hyperscalers. Capex is predominantly for AWS, and whilst management is confident of long-term returns on investment, the lack of visibility is not sitting well with investors. We have suddenly gone from the fear that you cannot be last, to investors questioning every single angle in this AI race.

"Sure, every company is seeing great returns on invested capital today, supply constraints exist, backlogs are full, and dollars are showing up where it matters, but the question remains on the future returns of these investments.

"This level of capex is expected to put pressure on free cashflow, though one can argue that Amazon has a great track record of managing through deep cycles in the past and coming out as a winner on the other side.

"Amazon is delivering the goods in both domestic retail margins and AWS share capture, and their right to win across their core businesses remains as good as anyone. The share price has been rocked by this news, but you have to consider whether Amazon is worse than the average S&P company. The answer is no, and as such investors need to stay patient until clearer signs of trouble become visible."