Amazon Stock Drops as Q4 Earnings and 2026 AI Investment Concern Investors
Amazon’s stock faced a significant decline following the company’s fourth-quarter earnings report and a forward-looking investment plan in artificial intelligence (AI).
Fourth-Quarter Earnings Overview
For the fourth quarter, which spanned October to December, Amazon’s revenue reached $213.4 billion. This figure surpassed Wall Street’s expectations with a 14% year-over-year growth. However, the company reported earnings per share of $1.95, falling just short of estimates by one cent.
Stock Market Reaction
Following the earnings announcement, Amazon shares dropped by 4% during regular trading. In after-hours trading, the decline deepened, with stocks falling an additional 7%. Investors expressed concern over the earnings and the company’s future spending plans.
Significant Investment in AI
Amazon’s plan to invest $200 billion in AI by 2026 raised eyebrows among analysts and investors. This budget exceeds previous expectations by over $55 billion. CEO Andy Jassy emphasized that this spending is necessary to meet strong demand across various sectors, including AI, chips, and robotics.
Investor Sentiments on AI Spending
Many investors are reconsidering large investments in AI as major tech companies face scrutiny over their expenditures. Concerns are emerging about a potential bubble due to the substantial funds directed towards data centers and related infrastructure.
CEO’s Assurance to Shareholders
In the quarterly letter to shareholders, Jassy assured that the anticipated returns on this massive investment would be “strong.” He noted that the AI movement would not be limited to a handful of companies but would involve thousands of new entrants into the tech landscape.
Impact of Thursday Night Football and Advertising Growth
The last quarter also witnessed significant viewership for Amazon’s Thursday Night Football on Prime Video, averaging 15.33 million viewers across 15 games. This event strengthened the platform’s advertisement revenue, which experienced a 22% increase year-over-year, totaling $21.3 billion in Q4.
- Fourth Quarter Revenue: $213.4 billion
- Earnings Per Share: $1.95
- Stock Decline: 4% in regular trading, 7% in after-hours
- AI Investment Plan: $200 billion by 2026
- Ad Revenue Growth: 22% increase to $21.3 billion
Overall, while the earnings report showcased Amazon’s revenue growth, the bold investment in AI sparked considerable concern, illustrating the ongoing complexities within the tech industry.
