Just now, sudden bad news! Tech giants, crashing!

The U.S. stock earnings season is full of risks.

After the earnings report, the stock price of the tech giant Amazon plummeted significantly, dropping over 11% in after-hours trading. Some analysts pointed out that due to an unexpected surge in capital expenditure guidance to $200 billion in 2026, Amazon’s earnings guidance fell short of expectations, causing investors to question whether such high investments can yield substantial returns in the future.

Wall Street institutions have warned that the current scale of AI (artificial intelligence) infrastructure construction is unprecedented, and the market is currently struggling to price related stocks reasonably. Recently, investor concerns about AI have been increasing.

Amazon’s Capital Expenditure Guidance Surprises

On February 5th, after the U.S. stock market closed, Amazon’s stock price sharply declined, once dropping over 11%. As of the time of writing, the decline remains at 11.26%.

Amazon’s latest financial report shows that in Q4 2025, net sales increased by 14% year-over-year to $213.39 billion, beating analysts’ expectations of $211.49 billion. Q4 EPS (earnings per share) was $1.95, up 4.8% year-over-year, slightly below the consensus estimate of $1.96. The growth rate slowed significantly from 36.4% in Q3.

However, the profitability growth of AWS has slowed slightly. The report indicates that in Q4 2025, AWS contributed an operating profit of $12.47 billion, up 17.3% year-over-year, with an operating margin of 35.0%, down from 36.9% in the same period last year.

Regarding the highly watched capital expenditure, Amazon expects to spend about $200 billion in 2026, a substantial increase of 50% from 2025, and about 36.9% higher than the consensus estimate on Wall Street.

Compared to this, Amazon’s guidance exceeds Google’s announced 2026 expenditure median of approximately $180 billion by 11%, far surpassing Meta’s planned maximum expenditure of $135 billion this year. Meanwhile, Microsoft’s total capital expenditure for FY2026, ending in June, is expected to be less than $100 billion.

Notably, while burning cash aggressively, Amazon’s cash flow has shown warning signs.

The financial report shows that by the end of Q4 2025, over the past 12 months, Amazon’s operating cash flow was $139.5 billion, up 20% year-over-year, but free cash flow was only $11.2 billion, a sharp 70.7% decrease from $38.2 billion last year.

The decline in free cash flow is directly due to the surge in capital expenditure: over the past 12 months, Amazon’s spending on property and equipment, net of disposals and incentives, reached $128.3 billion, a 65% increase year-over-year.

According to the cash flow statement, in 2025, spending on “purchases of property and equipment” reached $131.8 billion, a nearly 59% increase from $83 billion last year. The company explicitly states this mainly reflects AI-related investments.

Analysts point out that market concerns over Amazon’s $200 billion capital expenditure mainly include: ongoing pressure on free cash flow; short-term profit margins sacrificed for infrastructure expansion; and if AI monetization falls short of expectations, valuation pressures will increase.

Risks of the AI “Money Burning War”

Davis Wagner, portfolio manager at Aptus Capital Advisors, said about Amazon’s performance: “We initially expected strong profit growth to be continuous, but that hasn’t been the case. The market doesn’t like constant large capital expenditures just to achieve such growth rates.”

Regarding the future returns of massive capital spending, Amazon CEO Andy Jassy stated: “Given the strong demand for our existing products and services, as well as groundbreaking opportunities in AI, chips, robotics, and low Earth orbit satellites, we expect Amazon to invest about $200 billion in capital expenditures in 2026, with long-term investment returns expected to be very attractive.”

Amazon’s management also emphasized progress in self-developed chips and AI platforms, such as Trainium and Graviton, which together generate over $10 billion annually and are growing triple digits year-over-year. The demand for Trainium 2 and 3, along with the expansion of the Bedrock model ecosystem, further solidifies Amazon’s position as an “AI infrastructure provider.”

From the latest financial disclosures, major U.S. tech companies are unlikely to slow down their massive AI investments in the short term. Amazon, Microsoft, Alphabet, and Meta are expected to spend over $630 billion this year.

Scott Welch, Chief Investment Officer at Certuity, said that since late 2025, the market has begun to differentiate winners and losers in AI, and this trend continues. Funds are shifting from overvalued tech stocks to previously overlooked undervalued sectors.

Jedd Ellbrook, portfolio manager at Argent Capital, believes that the scale of AI infrastructure construction is unprecedented, but the market is currently struggling to price related stocks reasonably. Recently, concerns about AI have been rising.