Quarterly revenue tops expectations
Amazon reported fourth-quarter results that exceeded Wall Street’s revenue expectations, underscoring continued momentum across its e-commerce and cloud businesses. Sales rose 13.6% year over year to $213.4 billion, modestly ahead of market forecasts, while earnings per share came in broadly in line with consensus.
The company guided next quarter’s revenue to roughly $176 billion, closely matching analyst estimates and signaling steady demand entering the new fiscal year.
AWS strength offsets margin pressure
Amazon Web Services remained a key driver of performance, with revenue climbing to $35.58 billion, beating expectations by just over 2%. Operating profit in the cloud segment also exceeded forecasts, reinforcing AWS’s role as the group’s most profitable business and a critical pillar supporting overall margins.
In North America, revenue reached $127.1 billion, narrowly ahead of estimates, while operating profit in the region surpassed expectations by a wider margin, reflecting improved efficiency across fulfillment and logistics operations.
Profitability holds but cash flow softens
Amazon’s overall operating margin stood at 11.7%, unchanged from the same quarter last year. While this stability points to ongoing discipline on costs, free cash flow margin declined to 7% from 10.4% a year earlier, highlighting the impact of higher investment levels.
Operating profit on a GAAP basis came in slightly below forecasts, adding to investor caution despite solid top-line performance.
Capital spending plans raise investor concerns
Market reaction turned negative after Amazon disclosed plans to significantly ramp up investment. Management said it expects to spend around $200 billion on capital expenditures in 2026, representing an increase of more than 50% compared with 2025.
The scale of the planned outlay renewed concerns about how aggressively big technology companies are spending to support artificial intelligence, cloud infrastructure, and proprietary chip development, and how quickly those investments will translate into returns.
Management highlights innovation-led growth
Chief executive Andy Jassy pointed to strong growth across multiple areas of the business, including AWS, advertising, retail operations, and Amazon’s in-house chip initiatives. He said the company’s performance reflects ongoing innovation and its focus on solving customer needs at scale.
Advertising revenue expanded more than 20%, while AWS recorded its fastest growth rate in over three years, indicating that enterprise demand for cloud and AI-related services remains robust.
Long-term growth versus near-term caution
Over the past five years, Amazon has more than doubled its annual revenue base, demonstrating that scale and growth can coexist. Even though recent growth has moderated compared with earlier periods, the company continues to expand at a pace that compares favorably with peers.
Investors remain divided between confidence in Amazon’s long-term profitability trajectory and concern about near-term spending intensity. Following the earnings release and capital expenditure guidance, the stock fell more than 5%, reflecting unease over the balance between growth ambitions and financial discipline.
