Amazon Plunges 9% After Hours as $200B Spending Plan Shocks Wall Street Investors

Amazon Plunges 9% on Massive Capex Surprise

Amazon shares got hammered after the company reported earnings Thursday, not because the business is slowing, but because investors weren’t ready for how much money the company plans to spend next year. At 21:42 GMT, Amazon.com is trading $202.38, down $20.31 or -9.12%.

Earnings Looked Fine on the Surface

At first glance, Amazon’s earnings report didn’t look bad. Revenue came in a little above expectations, AWS growth was solid, and profits were basically in line with forecasts. If you just looked at the income statement, there wasn’t an obvious reason for panic. But investors weren’t focused on what Amazon earned last quarter. They were focused on what Amazon plans to spend going forward.

The $200 Billion Spending Shock

The big shock was Amazon’s announcement that it expects to spend about $200 billion in capital expenditures in 2026. Wall Street was looking for something closer to $146 billion. That’s not a small miss. That’s a massive jump, and it immediately raised red flags about cash flow and profitability.

Why Capex Matters More Than You Think

For everyday investors, capex might sound like boring accounting jargon, but it matters a lot. Capital spending is real money going out the door for things like data centers, AI infrastructure, chips, warehouses, and delivery networks. When a company ramps up spending this aggressively, it usually means less free cash flow in the near term, even if management promises big payoffs later.

Free Cash Flow Is Already Feeling the Pressure

Amazon is already showing signs of that tradeoff. Free cash flow dropped sharply over the past year, falling to around $11 billion, down dramatically from the year before. That decline wasn’t caused by weak sales or collapsing demand. It was driven by heavy investment. Investors are now being told that this spending isn’t slowing down — it’s accelerating.

AWS Margins Could Take a Hit

Another concern is AWS. While cloud revenue grew at a healthy pace, AI-related infrastructure is extremely expensive to build and maintain. More servers, more power consumption, more depreciation. Even if AWS keeps growing, margins could come under pressure as costs rise. Since AWS is Amazon’s biggest profit driver, anything that threatens its profitability makes investors nervous.

The Market Wants Results Now, Not in 2030

There’s also a timing issue. Amazon keeps stressing long-term returns, but the market is focused on the next few years, not the next decade. With interest rates still elevated and recession fears lingering, investors are less willing to wait patiently while companies spend heavily with no clear timeline for payoff.

Guidance Didn’t Offer Much Comfort

Guidance didn’t help much either. Amazon’s outlook for next quarter was roughly in line with expectations. That’s not bad, but it didn’t offer reassurance that profits are about to accelerate. When guidance is ordinary and spending plans are extraordinary, the stock tends to get punished.

Big Tech’s AI Spending Spree Is Under the Microscope

Finally, broader sentiment played a role. Investors are already uneasy about Big Tech’s AI spending spree. Amazon’s capex number landed just as traders are questioning whether the industry is overbuilding and chasing the same opportunities at the same time. That fear amplified the selloff.

Chart Pattern Turns Ugly After Breaking Key Averages

The chart pattern is pretty ugly too. Not only did it gap the 50-day moving average at $233.62 on Thursday, but it also closed below the longer-term 200-day moving average at $223.00. This opens the down for further downside pressure. The after-hours plunge to $202.38 has also put the stock inside our retracement zone target at $209.99 to $198.52. If the downside momentum continues on Friday’s opening, the April 25 main bottom at $161.38 will hit the radar.

Bottom Line

In short, Amazon’s stock didn’t fall because earnings were weak. It fell because investors are worried the company is spending too much, too fast, and pushing meaningful returns further into the future. Long-term believers may be fine with that. Right now, the market clearly isn’t. Technically, crossing to the weak side of the 50-day and 200-day moving averages is also flashing a bearish signal.

More Information in our Economic Calendar.