Amazon Plunges 9% After Hours as $200B Spending Plan Shocks Wall Street Investors

The $200 Billion Spending Shock The big shock was Amazon’s announcement that it expects to spend about $200 billion in capital expenditures in 2026. Wall Street was looking for something closer to $146 billion. That’s not a small miss. That’s a massive jump, and it immediately raised red flags about cash flow and profitability.

Why Capex Matters More Than You Think For everyday investors, capex might sound like boring accounting jargon, but it matters a lot. Capital spending is real money going out the door for things like data centers, AI infrastructure, chips, warehouses, and delivery networks. When a company ramps up spending this aggressively, it usually means less free cash flow in the near term, even if management promises big payoffs later.

Free Cash Flow Is Already Feeling the Pressure Amazon is already showing signs of that tradeoff. Free cash flow dropped sharply over the past year, falling to around $11 billion, down dramatically from the year before. That decline wasn’t caused by weak sales or collapsing demand. It was driven by heavy investment. Investors are now being told that this spending isn’t slowing down — it’s accelerating.

AWS Margins Could Take a Hit Another concern is AWS. While cloud revenue grew at a healthy pace, AI-related infrastructure is extremely expensive to build and maintain. More servers, more power consumption, more depreciation. Even if AWS keeps growing, margins could come under pressure as costs rise. Since AWS is Amazon’s biggest profit driver, anything that threatens its profitability makes investors nervous.

The Market Wants Results Now, Not in 2030 There’s also a timing issue. Amazon keeps stressing long-term returns, but the market is focused on the next few years, not the next decade. With interest rates still elevated and recession fears lingering, investors are less willing to wait patiently while companies spend heavily with no clear timeline for payoff.

Guidance Didn’t Offer Much Comfort Guidance didn’t help much either. Amazon’s outlook for next quarter was roughly in line with expectations. That’s not bad, but it didn’t offer reassurance that profits are about to accelerate. When guidance is ordinary and spending plans are extraordinary, the stock tends to get punished.