Amazon Sees Stock Drop Following Q4 Earnings and Increased AI Investment Plans for 2026
Amazon’s shares witnessed a significant decline following the tech giant’s release of mixed fourth-quarter earnings and a bold forecast for 2026 spending on artificial intelligence.
For the October to December period, Amazon reported revenue of $213.4 billion, surpassing Wall Street analysts’ expectations with a 14% year-over-year increase. However, earnings per share fell short by a penny, registering at $1.95 on a diluted basis.
In response to the earnings report, Amazon shares dropped 4% during Thursday’s regular trading session and an additional 7% in after-hours trading. The company announced it plans to invest $200 billion in AI by 2026, exceeding analyst predictions by more than $55 billion.
The decline in Amazon’s stock reflects broader pressure facing many large tech companies amid a reconsideration of AI investments. Analysts express concerns that the hefty financial commitments—totaling hundreds of billions annually for data centers and related resources—may indicate a looming market bubble.
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In a quarterly letter to shareholders, CEO Andy Jassy reassured investors about the long-term returns from such substantial expenditures, citing “strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites.”
During a conference call with analysts, Jassy elaborated on the concept of an expansive AI “movement,” suggesting that investment will come not only from a few major companies but “thousands” of entrants.
The holiday quarter also featured notable successes for Amazon Prime, including record viewership for Thursday Night Football, which averaged 15.33 million viewers across the 15 regular season games. Additionally, Prime Video launched an 11-year deal to stream NBA games starting last October. Black Friday has increasingly become a cornerstone for advertising and holiday shopping, benefiting both Prime Video and Amazon’s e-commerce operations.
Jassy highlighted Thursday Night Football as a crucial platform for fostering AI innovation during the call.
Moreover, Prime’s advertising revenue continued to rise, showing a robust 22% increase year over year, totaling $21.3 billion—marking yet another quarter of 20%-plus growth in this sector.
