Amazon's $200 Billion CapEx Plan Triggers Stock Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy AMZN?
Source: Fool
- Stock Decline Reasons: Amazon's shares have fallen about 13% year-to-date despite better-than-expected fourth-quarter revenue, primarily due to management's plan to invest $200 billion in capital expenditures in 2026, leading investors to exercise caution regarding this massive spending.
- Cloud Business Growth: Amazon Web Services (AWS) reported a 24% year-over-year growth in Q4, up from 20% in Q3, indicating strong demand driven by AI, with annual revenue exceeding $140 billion, showcasing significant growth potential.
- AI Chip Business Surge: The Trainium2 AI chip has become Amazon's fastest-growing chip launch, achieving a multibillion-dollar annualized revenue, and combined with Graviton chips, the overall chip business now generates over $10 billion annually, highlighting its competitive edge in the AI sector.
- Long-Term Investment Confidence: Despite stock price pressures, Amazon's management expresses confidence in the $200 billion capital expenditure, believing it will yield attractive long-term returns, particularly in the growth opportunities within cloud computing and AI.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 198.790
Low
175.00
Averages
280.01
High
325.00
Current: 198.790
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Amazon Shares Drop 13% in 2026 Despite Strong Q4 Revenue
- Capital Expenditure Plan: Amazon plans to invest $200 billion in capital expenditures in 2026, and despite management's expectation of strong long-term returns, investor caution regarding this massive spending has led to a 13% decline in stock price year-to-date.
- Cloud Computing Growth: Amazon Web Services (AWS) reported a 24% year-over-year revenue increase in Q4, reaching an annualized revenue run rate of over $140 billion, indicating strong market demand, particularly for AI workloads, further solidifying its leadership in the cloud computing sector.
- AI Chip Business: Amazon's Trainium2 AI chip has become its fastest-growing chip product, achieving an annualized revenue exceeding $10 billion, showcasing the company's strong momentum in the AI chip market and enhancing its competitiveness in the AI space.
- Profitability Risks and Opportunities: While Amazon's heavy reliance on AWS poses risks, if capital expenditures drive growth in this segment, it could enhance overall profitability, potentially leading to an inflection point in earnings growth in the long term.
See More
Amazon's AI Investments Amid Stock Volatility
- Stock Price Fluctuations: Amazon's stock surged about 7% to $247 per share at the start of the year but has since dropped approximately 14% over the last month, primarily due to the ongoing decline in software stocks, prompting investor sell-offs.
- Significant AI Budget Increase: Amazon plans to raise its capital expenditures to $200 billion for 2023, significantly exceeding Wall Street's expectation of $150 billion, which will decelerate free cash flow and impact short-term stock performance.
- Strong AWS Growth: Amazon Web Services (AWS) generated $35.6 billion in revenue during Q4, reflecting a 24% year-over-year growth, with a staggering $244 billion backlog indicating robust market demand and substantial future growth potential.
- Strategic Partnership Advantages: Amazon's collaboration with Anthropic is establishing a cost-efficient, vertically integrated AI ecosystem, and while initial investment returns may lag, this strategy is expected to enhance the company's competitive edge and market position in the long run.
See More
Three Recommended Tech Stocks and Their Outlook
- Taiwan Semiconductor's Strong Growth: In Q4 2025, Taiwan Semiconductor reported a 26% year-over-year revenue increase, with high-performance computing, including AI, accounting for 55% of total revenue, demonstrating its long-term stability and profitability amid rapidly changing tech trends.
- Apple's Ecosystem Advantage: Apple's iPhone sales surged 23% year-over-year in Q1 2025, with 2.5 billion active devices globally, indicating a robust user base and ongoing market appeal, despite competitive pressures in the AI sector.
- SanDisk's Rapid Ascent: Since its spin-off, SanDisk's stock has soared over 1,600%, and as a key supplier of AI-related products, it is expected to see strong demand, with projected earnings of $29.76 in 2026, highlighting its significant growth potential.
- Investment Value Analysis: Despite SanDisk's price-to-earnings ratio being only 15 times, its valuation based on forward earnings is extremely attractive, suggesting that buying at current prices could add substantial growth power to long-term investment portfolios.
See More
Amazon's $200 Billion CapEx Plan Triggers Stock Decline
- Stock Decline Reasons: Amazon's shares have fallen about 13% year-to-date despite better-than-expected fourth-quarter revenue, primarily due to management's plan to invest $200 billion in capital expenditures in 2026, leading investors to exercise caution regarding this massive spending.
- Cloud Business Growth: Amazon Web Services (AWS) reported a 24% year-over-year growth in Q4, up from 20% in Q3, indicating strong demand driven by AI, with annual revenue exceeding $140 billion, showcasing significant growth potential.
- AI Chip Business Surge: The Trainium2 AI chip has become Amazon's fastest-growing chip launch, achieving a multibillion-dollar annualized revenue, and combined with Graviton chips, the overall chip business now generates over $10 billion annually, highlighting its competitive edge in the AI sector.
- Long-Term Investment Confidence: Despite stock price pressures, Amazon's management expresses confidence in the $200 billion capital expenditure, believing it will yield attractive long-term returns, particularly in the growth opportunities within cloud computing and AI.
See More
Buffett's Final Quarter Investment Moves Before Retirement
- Selling Trend: In his final quarter before retirement, Buffett was a net seller of stocks, continuing a trend of selling more than buying for 13 consecutive quarters, indicating concerns over market valuations.
- Amazon Stake Reduction: During Q4, Buffett sold 7,724,000 shares of Amazon, reducing his stake by 77%, reflecting caution towards high valuations in the tech sector.
- Apple and Bank of America Cuts: Buffett cut his Apple holdings by 75% and Bank of America by 50%, suggesting a reassessment of future growth potential against current P/E ratios.
- New York Times Investment: In his last quarter, Buffett purchased 5,065,744 shares of The New York Times for nearly $352 million, indicating confidence in brand trust and the growth of digital subscriptions.
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Black Swift Group Exits MercadoLibre Position in Q4
- Position Exit: Black Swift Group, LLC completely sold its 3,405 shares of MercadoLibre in Q4 2026, with an estimated transaction value of $7.96 million, indicating a cautious outlook on the company's growth potential.
- Holding Proportion Shift: Following the sale, MercadoLibre represented only 1% of Black Swift's 13F AUM, with major holdings shifting towards SPYG and SPY, reflecting a strategic reallocation of the investment portfolio.
- Market Performance: As of February 9, 2026, MercadoLibre's stock price stood at $2,035.59, up 1.95% over the past year, yet underperforming the S&P 500 by 11.4 percentage points, raising concerns about its growth trajectory.
- Bad Debt Risk: The company's provision for doubtful accounts surged by 58% to $2.1 billion in the first nine months of 2025, and while MercadoLibre is leveraging AI to assess borrowers and mitigate bad debt losses, market confidence in its future remains shaky.
See More
Amazon Shares Drop 13% in 2026 Despite Strong Q4 Revenue
- Capital Expenditure Plan: Amazon plans to invest $200 billion in capital expenditures in 2026, and despite management's expectation of strong long-term returns, investor caution regarding this massive spending has led to a 13% decline in stock price year-to-date.
- Cloud Computing Growth: Amazon Web Services (AWS) reported a 24% year-over-year revenue increase in Q4, reaching an annualized revenue run rate of over $140 billion, indicating strong market demand, particularly for AI workloads, further solidifying its leadership in the cloud computing sector.
- AI Chip Business: Amazon's Trainium2 AI chip has become its fastest-growing chip product, achieving an annualized revenue exceeding $10 billion, showcasing the company's strong momentum in the AI chip market and enhancing its competitiveness in the AI space.
- Profitability Risks and Opportunities: While Amazon's heavy reliance on AWS poses risks, if capital expenditures drive growth in this segment, it could enhance overall profitability, potentially leading to an inflection point in earnings growth in the long term.
See More
Amazon's AI Investments Amid Stock Volatility
- Stock Price Fluctuations: Amazon's stock surged about 7% to $247 per share at the start of the year but has since dropped approximately 14% over the last month, primarily due to the ongoing decline in software stocks, prompting investor sell-offs.
- Significant AI Budget Increase: Amazon plans to raise its capital expenditures to $200 billion for 2023, significantly exceeding Wall Street's expectation of $150 billion, which will decelerate free cash flow and impact short-term stock performance.
- Strong AWS Growth: Amazon Web Services (AWS) generated $35.6 billion in revenue during Q4, reflecting a 24% year-over-year growth, with a staggering $244 billion backlog indicating robust market demand and substantial future growth potential.
- Strategic Partnership Advantages: Amazon's collaboration with Anthropic is establishing a cost-efficient, vertically integrated AI ecosystem, and while initial investment returns may lag, this strategy is expected to enhance the company's competitive edge and market position in the long run.
See More
Three Recommended Tech Stocks and Their Outlook
- Taiwan Semiconductor's Strong Growth: In Q4 2025, Taiwan Semiconductor reported a 26% year-over-year revenue increase, with high-performance computing, including AI, accounting for 55% of total revenue, demonstrating its long-term stability and profitability amid rapidly changing tech trends.
- Apple's Ecosystem Advantage: Apple's iPhone sales surged 23% year-over-year in Q1 2025, with 2.5 billion active devices globally, indicating a robust user base and ongoing market appeal, despite competitive pressures in the AI sector.
- SanDisk's Rapid Ascent: Since its spin-off, SanDisk's stock has soared over 1,600%, and as a key supplier of AI-related products, it is expected to see strong demand, with projected earnings of $29.76 in 2026, highlighting its significant growth potential.
- Investment Value Analysis: Despite SanDisk's price-to-earnings ratio being only 15 times, its valuation based on forward earnings is extremely attractive, suggesting that buying at current prices could add substantial growth power to long-term investment portfolios.
See More
Amazon's $200 Billion CapEx Plan Triggers Stock Decline
- Stock Decline Reasons: Amazon's shares have fallen about 13% year-to-date despite better-than-expected fourth-quarter revenue, primarily due to management's plan to invest $200 billion in capital expenditures in 2026, leading investors to exercise caution regarding this massive spending.
- Cloud Business Growth: Amazon Web Services (AWS) reported a 24% year-over-year growth in Q4, up from 20% in Q3, indicating strong demand driven by AI, with annual revenue exceeding $140 billion, showcasing significant growth potential.
- AI Chip Business Surge: The Trainium2 AI chip has become Amazon's fastest-growing chip launch, achieving a multibillion-dollar annualized revenue, and combined with Graviton chips, the overall chip business now generates over $10 billion annually, highlighting its competitive edge in the AI sector.
- Long-Term Investment Confidence: Despite stock price pressures, Amazon's management expresses confidence in the $200 billion capital expenditure, believing it will yield attractive long-term returns, particularly in the growth opportunities within cloud computing and AI.
See More
Buffett's Final Quarter Investment Moves Before Retirement
- Selling Trend: In his final quarter before retirement, Buffett was a net seller of stocks, continuing a trend of selling more than buying for 13 consecutive quarters, indicating concerns over market valuations.
- Amazon Stake Reduction: During Q4, Buffett sold 7,724,000 shares of Amazon, reducing his stake by 77%, reflecting caution towards high valuations in the tech sector.
- Apple and Bank of America Cuts: Buffett cut his Apple holdings by 75% and Bank of America by 50%, suggesting a reassessment of future growth potential against current P/E ratios.
- New York Times Investment: In his last quarter, Buffett purchased 5,065,744 shares of The New York Times for nearly $352 million, indicating confidence in brand trust and the growth of digital subscriptions.
See More
Black Swift Group Exits MercadoLibre Position in Q4
- Position Exit: Black Swift Group, LLC completely sold its 3,405 shares of MercadoLibre in Q4 2026, with an estimated transaction value of $7.96 million, indicating a cautious outlook on the company's growth potential.
- Holding Proportion Shift: Following the sale, MercadoLibre represented only 1% of Black Swift's 13F AUM, with major holdings shifting towards SPYG and SPY, reflecting a strategic reallocation of the investment portfolio.
- Market Performance: As of February 9, 2026, MercadoLibre's stock price stood at $2,035.59, up 1.95% over the past year, yet underperforming the S&P 500 by 11.4 percentage points, raising concerns about its growth trajectory.
- Bad Debt Risk: The company's provision for doubtful accounts surged by 58% to $2.1 billion in the first nine months of 2025, and while MercadoLibre is leveraging AI to assess borrowers and mitigate bad debt losses, market confidence in its future remains shaky.
See More
