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Amazon (AMZN -8%) is under pressure today after reporting fiscal Q4 results last night. The company missed on EPS, while revenue delivered only modest upside, rising 13.6% yr/yr to $213.39 bln. Since Amazon provides only GAAP EPS, it is also helpful to examine operating income as a clearer gauge of profitability. Q4 adjusted operating income of $27.4 bln exceeded prior guidance of $21-26 bln, while Q1 revenue guidance came in roughly in-line.

• The primary concern from the report centered on capital expenditures. Amazon expects cap-ex to reach roughly $200 bln in 2026, the majority of which will be directed toward AWS infrastructure. Management cited extremely strong demand for both core and AI workloads, noting that AWS is monetizing new capacity as quickly as it can be deployed.
• Cap-ex totaled $77.7 bln in 2024 and $128.3 bln in 2025, so the planned $200 bln cap-ex in 2026 represents a sharp acceleration.
• Investors are worried about margin pressure, AI bubble risk, and potential debt or dilution, especially after AMZN filed a mixed securities shelf offering.
• Within the Stores segment, Amazon closed the year on a strong note during the peak holiday season. Worldwide paid units increased 12%, Amazon's fastest quarterly growth rate of 2025.
• The standout performance came from AWS, which surprised to the upside. AWS revenue of $35.6 bln grew 24% yr/yr, accelerating from 20.2% in Q3. AWS now carries an annualized revenue run rate of ~$142 bln. Growth was driven by both core cloud services and AI workloads. In 2025, AWS added more data center capacity than any company globally.
• Advertising Services also remained a consistent growth driver. Advertising revenue grew 22% CC to $21.32 bln and matched Q3 and Q2 levels, reflecting steady momentum. • Management highlighted strength in its full-funnel advertising model, which simplifies brand-to-customer engagement.

Briefing.com Analyst Insight: Amazon delivered a solid quarter with broad-based strength across AWS, Advertising, and its core Retail business. The reacceleration in AWS growth to 24% yr/yr was particularly impressive and reinforces the durability of cloud demand, especially tied to AI workloads. That said, the market's focus has quickly shifted to Amazon's aggressive cap-ex trajectory, which is raising concerns around returns on investment, margin compression, and balance sheet risk. While AWS demand clearly remains robust, the planned $200 bln cap-ex spend in 2026 is a large leap that investors are not yet comfortable underwriting. As a result, shares are under pressure and trading near the $200 level, a price not seen since May 2025, as the market waits for greater clarity on long-term profitability and capital discipline.