As of February 26, 2026, Amazon has lost 9% of its share price year-to-year, eliminating the recent gains, which can be traced to the artificial-intelligence advances.
The company plans to invest heavily in capital expenditure amounting to $200 billion dollars in the calendar year, which is 50% more than the amounts planned in 2025 and is well above the estimated $150 billion by Wall Street. At its last close, on February 25, the stock lost 17% of its all-time high of November 254, and its market value is 2.3 trillion.
Spending Surge Sparks Fears
Most of the targeted spending focuses on building the AI data centers under the Amazon Web Services, which are meant to serve the increased need for generative AI workloads. The operating income of Amazon, however, in the entire year of 2025 was not more than eighty billion dollars, which makes the viability of returns questionable, considering the fact that the usefulness of GPUs is only a matter of six years before they become obsolete.
4TH quarter revenues grew by 14% to $213.4 billion, and its AWS revenue grew by 2.1% to $35.58 billion, but the news of the capex plan led to a one-day decline of the share price by 11%. This distribution of funds could lead critics to believe that it is coming at the expense of share buybacks or dividend disbursement, which might result in sustained depreciation in case of a decline in enthusiasm toward AI, as has happened with other similar ventures, like OpenAI and Anthropic.
Silver Linings Emerge
Amazon has reacted by building its own silicon, such as Triennium chips, making it less-dependent on Nvidia and cost-cutting on behalf of clients. Internal automation of the warehouse with the help of AI systems is also being implemented, and can help reduce their operational costs by 75%.
Chief Executive Officer, Andy Jassy, has termed the venture as a seminal opportunity with the belief that the newly acquired capacity will have direct monetization, just like the initial cloud-based business model. Jassy gave the statement after printing the earnings today, where he was confident that these investments would yield strong returns.
Bright Horizon Ahead
Wall Street sentiment is still largely positive; 44 analysts have given them a strong buy rating, and their valuation target is, on average, at 279.57, suggesting they would have a 33% upside. The competitive edge of AWS, as compared to its competitors like Microsoft, puts Amazon in a favorable position to claim the AI market in the future, as it has its footprint in e-commerce and the ability of cloud quality. Although the price fluctuations in the short run can be expected, more advanced investors can see the current downwards pattern as a good investment opportunity that can yield great profits as AI finds broader use. A continued implementation will have a significant growth in the free cash flow by 2027, with anticipated revenue of up to $716.9Bn in 2025.