Amazon reported higher sales and profit in the fourth quarter, but has signaled up to $200 billion of capital spending on AI and other infrastructure this year.
The retail giant saw net sales increase 14 per cent to $213.4 billion in the quarter ended December 31. North America sales rose 10 per cent, while international sales grew 17 per cent. AWS segment sales increased 24 per cent.
On the bottom line, operating income rose 18 per cent to $25 billion and net income was up 6 per cent to $21.2 billion.
For the full year, net sales increased 12 per cent to $716.9 billion and net income rose 31 per cent to $77.7 billion.
In the new fiscal year, the company plans to invest about $200 billion in capital expenditures, anticipating a “strong long-term return” on invested capital.
The decision, however, sent its shares down 11.5 per cent in after-hours trading.
According to GlobalData MD Neil Saunders, initial investor sentiment has been somewhat negative, mostly due to concerns around the future spending on AI and the bottom line coming in a little below expectations.
“These things matter, but they do not detract from the otherwise strong numbers that Amazon has produced,” Saunders said.
“It is also pleasing that Amazon maintained the sales momentum it had across 2025 during the all-important holiday quarter. From a retail perspective, product sales rose by 9.4 per cent which means that Amazon remains a market share winner in a landscape where competition was more intense and the consumer was more skittish in their shopping behavior,” he added.
‘Invest in things that matter’
Saunders said Amazon’s recent decision to exit its own-brand physical grocery stores, along with the wave of job cuts, reflects that sales growth is becoming harder to attain and that the cost environment continues to intensify.
“While some read this as a defensive move, it is actually the opposite. Amazon wants to free up capital to invest more in the things that matter and which can move the dial in the years ahead.
“On the retail front this includes huge expenditure on expanding fast delivery to more areas and using AI more effectively in the customer journey. More widely, Amazon will step up investments in AI capability and data centers,” the analyst explained.
“These things will certainly push up capital expenditure in the near term, but we see this as a very prudent move to maintain Amazon’s leadership in the decade to come, and which will ultimately fuel sales expansion,” he added.
Amazon expects its net sales to increase between 11 per cent and 15 per cent in the first quarter of this year.
