Amazon Internet Companies income grew at its quickest tempo in additional than three years, up 24% to $35.6 billion within the fourth quarter, in an indication that demand for synthetic intelligence and customized silicon is boosting company spending on the cloud.
The corporate disclosed income for its in-house information middle chips for the primary time, saying its Trainium and Graviton processors have a mixed annual run charge of greater than $10 billion.
However the income milestones are coming at a giant price. In the earnings launch, Amazon CEO Andy Jassy signaled plans to spend a document $200 billion in capital expenditures throughout Amazon in 2026, citing “seminal alternatives like AI, chips, robotics, and low earth orbit satellites.”
Many of the capital spending is on AWS, Jassy mentioned on the earnings convention name, searching for to guarantee traders that Amazon is “monetizing capability as quick as we are able to set up it.”
He pushed again on skepticism in regards to the capital spending, saying “this isn’t some kind of quixotic top-line seize,” and in contrast the AI funding cycle to the early days of the corporate’s core cloud enterprise. He known as the present second an “terribly uncommon alternative to eternally change the dimensions of AWS and Amazon as a complete.”
When requested in regards to the form of AI demand, Jassy provided a “barbell” analogy. On one finish are the AI analysis labs spending “gobs and gobs of compute.” On the opposite are enterprises utilizing AI for routine duties like customer support and enterprise course of automation.
However the huge $200 billion guess is focused on the “center of the barbell,” core enterprise manufacturing workloads, which Jassy argues haven’t actually arrived but.
“The lion’s share of that demand remains to be but to return,” Jassy mentioned. He predicted this center part “might find yourself being the biggest and probably the most sturdy” a part of the AI market.
Amazon’s plan provides to a wave of record-setting AI infrastructure spending from tech giants.
- Google mother or father Alphabet mentioned Wednesday it expects 2026 capital expenditures of $175 billion to $185 billion, roughly double its 2025 spending.
- Microsoft reported spending of $37.5 billion in its most up-to-date quarter alone, which contributed to a serious decline in its shares.
- Meta expects to spend between $115 billion and $135 billion.
For the complete 12 months, Amazon generated $139.5 billion in money from its operations in 2025, up 20%. However after accounting for the huge infrastructure buildout, the corporate was left with $11.2 billion in free money circulate, down from $38.2 billion a 12 months earlier.
Which means Amazon is making more cash than ever, however plowing almost all of it again into constructing out AI capability, leaving little money left over for shareholders.
Amazon shares fell 10% after-hours following the earnings report. Along with the outsized capex projection, the corporate’s income of $1.95/share simply missed Wall Road’s expectations.
