February 06, 2026
Amazon’s AI Push Draws Mixed Reactions as Massive Spending Plans Raise Questions
Amazon’s latest earnings report revealed explosive growth in artificial intelligence and cloud services, but investors reacted negatively to the company’s announcement of $200 billion in planned spending for 2026, sending the stock down approximately 8% following the earnings call.
The company reported AWS revenue of $35.6 billion in Q4 2025, marking a 24% year-over-year increase and the highest growth rate in over three years. AWS now generates $142 billion in annual revenue, according to CEO Andrew Jassy, though Wall Street’s concerns centred less on current performance and more on future profitability amid unprecedented infrastructure investments.
“I passionately believe that every customer experience that we know of today is going to be reinvented with AI. “There are gonna be a whole bunch of customer experiences none of us ever imagined that are gonna become the norms of how we all operate every day,” Jassy said during the earnings call.
Despite the bullish vision, investors worried that the massive capital spending, predominantly for AWS data centres and AI infrastructure, could pressure profit margins in the near term. The company’s Q1 operating income guidance came in below Wall Street expectations, contributing to the stock decline.
Faster Delivery, Smarter Shopping Tools
On the bright side, Amazon’s AI investments are already transforming customer interactions. The company’s shopping assistant Rufus reached 300 million users in 2025, with customers who used the tool showing 60% higher purchase completion rates. The AI-powered visual search tool Lens saw usage increase 45% year-over-year, allowing customers to find products using their phone’s camera, screenshots, or barcodes.
Amazon’s Bedrock AI platform, which helps businesses build AI applications, has become a multibillion-dollar business, with customer spending growing 60% from the previous quarter. The company recently launched NovaForge, which allows enterprises to customise AI models with their proprietary data during the training stage, a capability Jassy described as “a potential game-changer for companies.”
On the retail side, delivery speed continues to drive customer satisfaction and loyalty. U.S. Prime members received over 8 billion items same-day or next-day in 2025, up more than 30% year-over-year. CFO Brian Olsavsky highlighted an important achievement: “For the third year in a row, globally in 2025, we achieved both our fastest ever delivery speeds for Prime members while also reducing our cost to serve.”
The company’s quick commerce service, Amazon Now, which delivers thousands of items in approximately 30 minutes, showed particularly strong results. In India, where the service launched first, Prime members triple their shopping frequency after trying it.
The advertising business generated $21.3 billion in Q4 revenue, up 22% year-over-year. Prime Video’s ad-supported audience expanded to 315 million global viewers from 200 million at the start of 2024.
Looking ahead, Amazon expects Q1 2026 net sales between $173.5 billion and $178.5 billion. Whether the company’s aggressive AI investments will satisfy investors’ return expectations remains the key question facing management in the quarters ahead.
