Finance
Amazon shares sink as Big Tech's AI spending plans worry investors
Published by Global Banking & Finance Review®
Posted on February 6, 2026
2 min readLast updated: February 6, 2026
Quick Summary
Amazon shares fell 8% as investors worry about AI spending. Big Tech's $600 billion investment raises concerns over returns and cloud revenue impact.
Amazon Stock Drops 8% Amid Concerns Over Big Tech's AI Investments
Impact of AI Spending on Amazon Shares
Feb 6 (Reuters) - Amazon shares dropped 8% in premarket trading on Friday after the company's hefty capital expenditure plans deepened investor worries over Big Tech's spending spree on artificial intelligence.
Investor Reactions to Capital Expenditure
Massive AI spending by companies - estimated to be more than $600 billion this year - have raised doubts among investors over the prospects of immediate returns from the huge capital outlays.
Comparative Analysis of Cloud Revenue Growth
They also fear that rapidly improving AI tools could eat into demand for traditional software, squeezing profit margins, resulting in a broader selloff across the tech sector.
Brokerage Responses and Price Targets
Amazon's capex spending plans are expected to reach $200 billion in 2026. Alphabet said its capex could double from a year ago, while Meta and Microsoft has ramped up their spending plans.
"While the rising capital intensity is not a surprise directionally, the magnitude of the spend is materially greater than consensus expected," MoffettNathanson analysts said in a note.
In contrast to Alphabet's confident tone on its spending plans, Amazon CEO Andy Jassy struck a defensive note during the post-earnings investor call.
"As a reminder," said Jassy, referring to the results of cloud platform Amazon Web Services, "it's very different having 24% year-over-year growth on $142 billion annualized run rate, than to have a higher-percentage growth on a meaningfully smaller base, which is the case with our competitors."
AWS revenue grew to $35.6 billion in the December quarter, while Google Cloud grew 48% to $17.75 billion. Microsoft's Azure surged 39% in the same period.
"We do not think they would be spending $200B in FY26 if they did not have the appropriate demand signals, but the margin of error is shrinking," MoffettNathanson analysts said.
At least five brokerages have reduced their price targets on the stock following results. Amazon trades at a price-to-earnings ratio of 27.01, compared with Microsoft's 21.62 and Alphabet's 28.36.
(Reporting by Kanchana Chakravarty in Bengaluru)
Key Takeaways
- •Amazon shares dropped 8% due to AI spending concerns.
- •Big Tech's AI investments estimated over $600 billion this year.
- •Amazon's capex plans to reach $200 billion by 2026.
- •AWS revenue grew 24% year-over-year to $35.6 billion.
- •Brokerages have reduced price targets for Amazon stock.
Frequently Asked Questions about Amazon shares sink as Big Tech's AI spending plans worry investors
1What is capital expenditure?
Capital expenditure refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, or equipment.
2What is artificial intelligence?
Artificial intelligence (AI) is the simulation of human intelligence processes by machines, particularly computer systems, enabling them to perform tasks that typically require human intelligence.
3What is cloud revenue?
Cloud revenue refers to the income generated from services provided over the internet, such as cloud computing and storage solutions.
4What is a price-to-earnings ratio?
The price-to-earnings (P/E) ratio is a valuation measure calculated by dividing the market price per share by the earnings per share, indicating how much investors are willing to pay for a dollar of earnings.
