Amazon Faces Significant Stock Decline Amid Rising Capital Expenditures
Amazon (NASDAQ: AMZN) has seen shares drop 11% year-to-date, with a 15% decline in February alone, primarily due to a projected capital expenditure budget of $200 billion for 2026—significantly higher than the $150 billion anticipated by analysts. The company’s trailing-12-month free cash flow plummeted 71%, from $38.2 billion in 2024 to $11.2 billion at the end of 2025, largely attributed to massive investments in artificial intelligence.
Despite fourth-quarter 2025 results showing a 12% increase in revenue to $717 billion and a 30% rise in earnings per share, Wall Street is increasingly concerned about Amazon’s cash-flow profile, questioning the sustainability of such high capital spending. The company is focusing on building data centers, developing custom chips, and investing in AI while competing against major players like Microsoft and Google in the cloud services market, where AWS generated $35.6 billion in revenue in the fourth quarter.
