Amazon Q4 Sales Jump 14%, Shares Slide on $200B Spend Plan

Post by : Bianca Haleem

Amazon reported strong fourth-quarter results, with revenue rising 14% on the back of solid holiday shopping and faster growth in its cloud business, Amazon Web Services (AWS). However, the company’s shares fell sharply in after-hours trading as investors reacted to Amazon’s plan to significantly increase spending this year.

The Seattle-based tech giant said it expects capital spending to rise by nearly 60%, reaching $200 billion, compared with $128 billion last year. Wall Street analysts were expecting spending to increase to around $147 billion, according to FactSet. The higher investment plan made investors cautious, even though Amazon highlighted long-term benefits.

Amazon CEO Andy Jassy said the company is investing heavily because of major opportunities in artificial intelligence, robotics, semiconductors, and satellites. He told investors that demand for AI capacity is strong and Amazon is monetizing it quickly as new infrastructure is installed.

Despite the revenue growth, Amazon’s fourth-quarter profit came slightly below analysts’ expectations, which also added pressure on the stock.

AWS Growth Speeds Up

Amazon Web Services delivered 24% growth in the fourth quarter, marking its fastest growth in 13 quarters, the company said. AWS revenue reached $35.6 billion, beating analyst expectations of $34.9 billion.

AWS growth has been improving steadily over the past few quarters:

Q2: 17.5%
Q3: 20%
Q4: 24%

Amazon is facing growing competition from Microsoft Azure and Google Cloud, as investors continue to compare performance across major cloud providers. Alphabet, Google’s parent company, recently reported a 48% rise in its cloud business revenue.

Big AI Spending Across Tech

Amazon’s spending plan comes as other Big Tech companies are also increasing investments in AI. Alphabet said it expects to spend $175 billion to $185 billion this year after investing $91 billion mainly on AI-related capital expenditures.

Layoffs Continue

Amazon is also reducing its workforce as it restructures operations. The company is cutting around 16,000 corporate jobs, marking the second major round of layoffs in three months.

This follows 14,000 job cuts in October, bringing total layoffs to over 30,000 since CEO Andy Jassy began pushing AI-driven organizational changes. Amazon said AI is not the main reason behind most of the job cuts, stating that the reductions are mainly focused on removing layers to improve speed and efficiency.

Separately, Amazon said it is also cutting around 5,000 retail jobs, linked to its decision to close nearly all Amazon Go and Amazon Fresh stores.

Amazon Expands Fast Delivery and Grocery

Amazon continues investing in its fulfillment network using AI, robotics, and improved warehousing.

The company also highlighted growth in fast delivery services:

Amazon Now, a 30-minute delivery service, is currently available in selected cities in India, Mexico, and the UAE
The service is being tested in parts of the U.S. and the U.K.
Amazon is expanding same-day grocery delivery to more than 2,300 cities and towns across the U.S.

Jassy said the company continues to see strong customer demand for daily essentials and groceries.

Amazon Go and Fresh Stores to Shut

Amazon confirmed it is closing almost all Amazon Go and Amazon Fresh locations as it shifts focus toward: