Amazon shares sank over 9% in after-hours trading on Thursday as the tech and e-commerce giant reported mixed results for its fourth quarter and a 50% spending increase of $200 billion in capital expenditures for 2026.
Total revenue grew 14% to $213.4 billion, while operating profit came in at $25 billion, up from $21.2 billion in the prior-year period. But it narrowly missed Wall Street earnings expectations, with net income of $21.2 billion, or $1.95 per share.
Advertising services revenue, which includes sales to sellers, vendors, publishers, authors and others through programs such as sponsored ads, display and video advertising, grew 23% to $21.3 billion.
Meanwhile, net sales in the subscription services segment, which includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book and other non-Amazon Web Services subscription services, grew 14% to $13.1 billion during the quarter.
Here are the quarter’s results:
Net income: $21.2 billion, compared to $20 billion a year ago, which included $730 million in severance costs, a $1.1 billion charge related to resolving a tax dispute in its stores business in Italy and $610 million impairments related to its physical stores. Without these charges, operating income would have been $27.4 billion.
Net sales: $213.4 billion , up 14% year over year, compared to $211.23 billion expected by analyst estimates compiled by Yahoo Finance.
Earnings per share: $1.95 per diluted share, compared to $1.96 per share expected by analyst estimates compiled by Yahoo Finance.
Last month, Amazon said it would cut 16,000 additional jobs following a previous round of layoffs in October that impacted 14,000 employees. The company recorded $730 million in estimated severance severance costs during the quarter.
Looking ahead to the first quarter of fiscal 2026, the company is forecasting net sales between $173.5 billion and $178.5 billion, or growth of 11% to 15%, and operating income between $16.5 billion and $21.5 billion, compared with $18.4 billion in first quarter 2025.
The operating income guidance includes roughly $1 billion of higher year over year costs related to Amazon Leo, as well as investment in quick commerce and sharper prices in its international stores business. The overall guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.
Amazon bets big on AI, touts strong demand
Amazon anticipates $200 billion in capital expenditures for 2026, touting “strong” demand for its existing offerings and “seminal opportunities” with AI, chips, robotics and low Earth orbit satellites.
“We’re spending, and intend to spend this predominantly in [Amazon Web Services]. Some of it is for our core workloads, which are non AI workloads because they’re growing at a faster rate than we anticipated. But most of it is an AI,” Amazon CEO Andy Jassy told analysts. “We just have a lot of growth and a lot of demand. When you’re growing 24% year over year, with an annualized revenue run rate of $142 billion, you’re growing a lot and what we’re continuing to see is, as fast as we install this AI capacity, we are monetizing it. So it’s just a very unusual opportunity.”
Jassy added that he believes every customer experience will be reinvented with AI.
“They’re going to be a whole bunch of customer experiences that none of us ever imagined, that are going to become the norms of how we all operate every day and what we use,” he continued. ” The other thing is that if you really want to use AI in an expansive way, you need your data in the cloud, and you need your applications in the cloud, those are all big tailwinds pushing people towards the cloud. So we’re going to invest aggressively here. We’re going to invest to be the leader in this space, as we have been for the last number of years.”
AWS segment sales increased 24% year-over-year to $35.6 billion during the quarter, with a backlog of $244 billion, up 40% year over year. In November, AWS announced a multi-year strategic partnership with OpenAI.
“It’s a big one and we have a lot of respect for the company and we hope to continue to extend our partnership over time,” Jassy said. “But this AI movement is not going to be a couple companies. It’s going to be thousands of companies over time.”
Prime Video ad tier tops 315 million monthly active users
In November, the tech giant revealed that Prime Video’s ad tier reaches over 315 million monthly active users globally, including more than 130 million in the United States alone.
In addition to the U.S., the ad tier is available in Australia, Austria, Brazil, Canada, France, Germany, India, Italy, Japan, Mexico, New Zealand, The Netherlands, Spain, Sweden and the U.K.
Entertainment highlights during the quarter include the most-watched season of “Thursday Night Football” ever, which averaged more than 15 million viewers on Prime Video — a 16% increase year-over-year and third consecutive year of double-digit growth. The service also hosted the NFL’s Packers vs. Bears Wild Card Playoff game, which became the most-streamed NFL game in history with more than 31 million viewers watching.
Additionally, the NBA made its debut on Prime Video in more than 200 countries, including exclusive coverage of the Emirates NBA Cup, culminating with the Spurs vs. Knicks Championship, which averaged 3 million+ viewers and attracted the youngest-ever audience for a Cup Championship, according to Nielsen.
Amazon also extended its broadcast rights for UEFA Champions League in Germany, Ireland, Italy, and the UK through 2030-31 season following continued strong viewership, including a record-breaking more than 10 million viewers streaming League Phase matches on Prime Video in Germany, Ireland, and the UK in a single evening.
Shares of Amazon are up 4% in the past six months and 32% in the past five years, but are down 5.7% in the past year.
