Amazon Earnings Volatile After Capex Jump
Amazon earnings Q4 revenue beat, a narrow EPS miss and $200 billion 2026 capex triggered extended-session volatility and renewed free cash flow concerns.
KEY TAKEAWAYS
- Guided $200 billion in 2026 capex, about a 60% increase from 2025.
- Q4 revenue beat at $213.4 billion while GAAP EPS missed at $1.95.
- Free cash flow fell to $11.2 billion, down 71% year-over-year, raising FCF concerns.
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Amazon.com Inc. reported stronger fourth-quarter revenue on Feb. 5, 2026, but narrowly missed GAAP earnings per share expectations. The company also outlined a sharply higher capital-spending plan for 2026, driving extended-session losses and raising concerns about free cash flow.
Quarter Results and Cash Flow
Amazon said in a press release on Feb. 5, 2026, that fourth-quarter 2025 revenue reached $213.4 billion, up 13.6% year-over-year and about 0.9% above consensus. GAAP earnings per share came in at $1.95, slightly below the $1.96–$1.98 consensus range. Free cash flow fell 71% year-over-year to $11.2 billion.
Amazon Web Services (AWS) accelerated growth, generating $35.6 billion in revenue, a 24% increase year-over-year. AWS reported $12.5 billion in operating income on a 35% operating margin, exceeding expectations and providing a strong earnings engine as other segments absorbed costs.
2026 Capital Expenditures and Outlook
The company guided to $200 billion in capital expenditures for 2026 to support AI infrastructure, chips, robotics, and a low-earth-orbit satellite constellation. This represents a roughly 60% increase from the $125 billion invested in 2025.
For the first quarter of 2026, Amazon forecast revenue between $173.5 billion and $178.5 billion, reflecting 11% to 15% year-over-year growth. Operating income is projected between $16.5 billion and $21.5 billion, including about $1 billion in higher costs related to the Amazon Leo satellite program.
Shares fell roughly 5% to 10% in extended trading after the release. The stock closed at $239.30 on Feb. 5, down 1.0% from the Jan. 30 close. Analysts have set a consensus price target near $296 and a forward price-to-earnings ratio around 38, with expectations for better-than-20% earnings compound annual growth through 2028. Investors face a trade-off between near-term cash-flow pressure and the company’s AI-driven growth trajectory.
