Amazon shares are nearly 8% lower ahead of the bell as investors turn on the scale of its AI spending, and the tech-heavy Nasdaq is in sell-off mode.
Capital expenditure came in at $77.3 billion against a consensus of $58.67 billion, and free cash flow over the past 12 months was an outflow of $42.4 billion.
Amazon held its 2026 capex plan at about $220 billion, so there is no sign of the spending easing.
It is the third big technology group in nine days to be sold on the cost of its AI build-out.
Returns, not promises
Neil Wilson, UK investor strategist at Saxo Markets, said investors do not just want capex, they want to see the returns already.
He said markets appear to have priced in near-perfect execution.
Dan Ives of Yorkville Ives takes the opposite view, keeping his "outperform" rating and $300 price target, about 18% above the $254.60 share price.
He argues a higher 2027 spending figure would confirm demand rather than act as a warning, given an AWS backlog near half a trillion dollars.
How we got here
Meta set the pattern, falling 7.23% on 22 October after quarterly capex of $34.91 billion exceeded its $32.79 billion of operating cash flow.
Alphabet, the Google parent, then fell 12% on Thursday, its worst day in more than 20 years, with quarterly free cash flow negative by $9.1 billion.
Microsoft shows the other side of the trade: it spent less than it had guided and closed almost unchanged.
The numbers
Amazon earned $1.89 a share against forecasts of $1.96 to $1.97, on revenue of $201.9 billion against the $202.2 billion expected.
Amazon Web Services, its cloud arm, grew 39% to $46 billion, its fastest rate in almost five years.
Fourth-quarter operating income guidance of $28.5 billion to $33.5 billion has a midpoint below the $33.2 billion expected.
It runs to about 340 words plus the standfirst. I dropped Jassy's AWS growth forecast to fit the length; say if you want it back.
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