Amazon Shares Drop As Investors Squint At Capex

Amazon shares slid in premarket trading on February 6, 2026 as Wall Street fixated on the company’s 2026 spending plans for its AI and cloud buildout. Shares dropped by about 8% this morning after investors digested the company announcement that they expect to spend about $200 billion — intensifying worries that Big Tech’s AI spending is faster than near-term returns are getting visible.

The fears weren’t just about Amazon’s number. This year, AI spending has been estimated at more than $600 billion across major companies. Another concern is that by improving AI tools, traditional software demand and margins might fall — fueling a wider selloff across the market. Analysts at MoffettNathanson summed up the sentiment by saying capex intensity wasn’t the shock, but “the magnitude of the spend is materially greater than consensus expected,” adding that while demand signals likely exist, “the margin of error is shrinking.”

On Amazon’s post-earnings call, CEO Andy Jassy struck a more defensive tone than his peers. Emphasizing the scale and significance of AWS in comparison to its competitors, he contrasted 24% year-over-year growth on a $142 billion annualized run rate with higher percentage growth. AWS revenue was $35.6 billion in the December quarter, up 24% YoY, which is way less than what Google Cloud experienced (48% for their quarter), and Microsoft Azure (39%) - though both run off a smaller revenue base.

Amazon's case is straightforward - even if the invoice is not. Amazon appears to be buying future capacity in a market it believes is real. The case for caution is equally legitimate - bigger checks mean more scrutiny. At least five brokerages cut price targets for Amazon, which as of now is trading around 27.01x earnings. Compare that with Microsoft’s stable 21.62 and Alphabet’s 28.36. So far we don't know if the reward will outweigh the risks associated with that kind of spending, but what the initial market reaction seems to be saying is Amazon might want to reign in the spending - because $200 billion is still a lot of money.

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