Amazon Shares Slump 11% as Capex Forecast Exceeds Estimates, Outlook Disappoints
$Amazon (AMZN.US)$ forecast 2026 capital expenditures that were far higher than what analysts' were expecting, and gave a first quarter operating income outlook that was below expectations, sending the stock tumbling in extended trading Thursday.
Capital expenditures was forecast to reach about $200 billion, above the average estimate of $146.11 billion, according to analysts' estimates compiled by Bloomberg. First quarter operating income was seen reaching $16.5 billion to $21.5 billion, missing the average estimate of estimate $22.24 billion.
CEO Andy Jassy justified the increase in spending, citing the "strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites." He also said the company expects "strong long-term return on invested capital.”
Shares slump d 11% as Amazon joined other hyperscalers that have been penalized by Wall Street for their massive spending on artificial intelligence infrastructure build-out, raising worries that they may not generate enough return to justify the huge cost.
$Microsoft (MSFT.US)$ has plunged more than 18% since reporting that its fiscal second quarter capital expenditures rose 66% to a record $37.5 billion. $Alphabet-A (GOOGL.US)$ shares also declined Thursday after the company said capex will reach as much as $185 billion this year, far above the $119.5 billion expected by analysts and double its spending last year.
The surge in Amazon's planned spending overshadowed the acceleration in revenue growth for Amazon Web Services in the fourth quarter. That segment saw a 24% jump in revenue to $35.6 billion. That's better than the 21% increase to $34.88 billion that analysts were expecting.
Net sales rose 14% to $213.39 billion for the three months ended December, compared with $211.49 billion expected by analysts.
Before the financial results were released, Amazon's options market was signaling an 8.4% move in the share price tomorrow.
(To see Amazon's options chain, click here. For the options market page, click here.)
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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