Amazon shares slide as $200 billion outlay followers fears over AI returns – One America Information Community

[ad_1] By Kanchana Chakravarty and Aditya SoniFebruary 6, 2026 – 2:20 AM PST

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(Reuters) – Amazon.com (AMZN.O) shares slid 9% on Friday after the corporate outlined a deliberate $200 billion capital outlay for the 12 months, stoking investor issues concerning the scale of Huge Tech’s spending on synthetic intelligence.

Amazon on Thursday joined rivals in forecasting sharply greater expenditures this 12 months, as U.S. tech giants now purpose to pour greater than $630 billion into datacenters and the AI chips that energy them, an unprecedented degree of funding.

Traders anticipated the businesses to ramp up spending after they pinned their futures to the expertise, however some analysts mentioned the scale of the will increase stunned the market and raised questions on whether or not returns can hold tempo.

“Whereas the rising capital depth isn't a shock directionally, the magnitude of the spend is materially larger than consensus anticipated,” MoffettNathanson analysts mentioned, referring to Amazon’s prediction for a 50% outlay bounce.

The surge in spending has revived comparisons with the dot-com period growth of the early 2000s, which helped construct the fashionable web however delivered solely modest returns for a lot of firms that financed the underlying infrastructure.

Amazon’s forecast additionally landed amid broader volatility tied to AI expectations. Shares of Microsoft (MSFT.O) and Alphabet (GOOGL.O), Amazon’s two largest cloud rivals, fell after their earnings, at the same time as new expertise from the AI startups they again triggered a rout in software program shares and intensified a debate over an existential menace to the sector.

The S&P 500 software program and companies index (.SPLRCIS) has shed about $1 trillion in market worth since January 28.

AJ Bell funding director Russ Mould mentioned the declines mirrored a transfer away from shares “the place constructive surprises could also be exhausting to attain and it's simpler to disappoint than many might imagine.”

He mentioned hyperscalers, or massive cloud firms, are actually shifting from an asset-light mannequin to a extra capital-intensive one, with capex development far outstripping gross sales development.

Amazon was set to lose round $200 billion in market worth if the losses maintain. It trades at a price-to-earnings ratio of 27.01, in contrast with Microsoft’s 21.62 and Alphabet’s 28.36.

TECH EXECUTIVES CONFIDENT ABOUT SPENDING

Huge Tech CEOs have thus far remained undeterred by doubts over the spending, promising that returns from AI will far outweigh what they see as the price of competing in a high-stakes race.

Amazon Chief Govt Andy Jassy echoed that sentiment on the post-earnings name, defending Amazon Internet Providers’ income development of 24% that was slower than rivals Google Cloud’s 48% development and Microsoft’s Azure 39% rise.

“As a reminder,” he advised analysts, AWS is a a lot bigger enterprise than its opponents and sustaining that degree of development on such a big base is completely different.

Some analysts backed his argument however mentioned that spending left no area for errors.

“We don't suppose they might be spending $200 billion in FY26 if they didn't have the suitable demand alerts, however the margin of error is shrinking,” MoffettNathanson analysts mentioned.