Amazon stocks plunge on massive AI spending plan despite strong Q4 earnings

Amazon shares fell sharply in after-hours trading on Thursday after the company unveiled a massive spending plan for artificial intelligence, overshadowing its strong fourth-quarter earnings.

The stock plummeted by more than 10 percent after Amazon said it would invest about 200 billion U.S. dollars in capital expenditures in 2026, with most of the funds earmarked for AI-related infrastructure. The spending commitment far exceeded analysts' expectations and surpassed planned investments by other major tech companies.

Moreover, Amazon projected its operating income to be between 16.5 billion and 21.5 billion U.S. dollars, falling short of analysts' expectations and raising concerns that heavy AI-related spending could weigh on profitability in the short term.

In the fourth quarter, Amazon's net sales increased 14 percent year on year to 213.4 billion U.S. dollars, beating analysts' expectations. Sales from its cloud service business, Amazon Web Services (AWS), grew almost 24 percent in the fourth quarter to 35.6 billion U.S. dollars, the fastest in 13 quarters. However, AWS's operating revenue rate fell to 35 percent in the fourth quarter, down from the same period last year, indicating that AWS's profitability did not continue to expand.

U.S. tech giants, including Amazon, Microsoft, Google, and Meta, are racing to invest in AI infrastructure. Recent earnings reports showed that they would invest a total of 500 billion U.S. dollars in AI initiatives.

Wall Street has sent a clear message to these firms: their current spending levels will be supported by investors only if they deliver tangible financial returns.

On Wednesday, Google's parent company, Alphabet, said it expected the 2026 capital expenditures to be in the range of 175 billion to 185 billion U.S. dollars, nearly doubling the figure of 2025. The announcement led to a decline in Alphabet shares of as much as 7.5 percent.

Microsoft also faced a similar reaction. In its earnings report released on January 28, the company said its cloud business growth exceeded expectations but still lagged behind the pace of capital spending. Following the report, Microsoft shares fell as much as 6.6 percent.

Amazon stocks plunge on massive AI spending plan despite strong Q4 earnings

Chinese Premier Li Qiang on Thursday presided over a State Council executive meeting that studied work on building a unified national market and reviewed and approved a plan for the development of a modern emergency response system during the 15th Five-Year Plan period (2026-2030).

Noting that building a unified national market is essential to advancing high-quality development, the meeting called for deepening institutional frameworks in areas such as property rights protection, market access, fair competition, social credit and market exit mechanisms.

The meeting also urged efforts to advance high-standard connectivity of market infrastructure to facilitate smooth economic circulation and effectively reduce logistics costs across society.

Emergency management is critical to protecting people's lives and property, the meeting said. It called for accelerating the development of a modern emergency response system, deepening reform and innovation in emergency management, and improving coordinated response mechanisms.

Efforts should be made to strengthen risk prevention at the source, enhance monitoring, forecasting and early warning, and accelerate a shift in governance toward proactive prevention, according to the meeting.

A draft revision of the Law on the People's Bank of China was also discussed and approved in principle at the meeting, which decided to submit the draft to the Standing Committee of the National People's Congress for deliberation.

Chinese premier chairs State Council executive meeting