Amazon’s latest quarterly report delivered a familiar contradiction for Wall Street: strong top-line growth paired with investor unease. The Amazon Q4 earnings miss came despite solid holiday demand and accelerating growth in its cloud computing business, Amazon Web Services (AWS). Shares of Amazon.com Inc. (NASDAQ:AMZN) slid nearly 10% in after-hours trading as profits narrowly missed expectations and management outlined a sharp increase in capital expenditures.

Revenue Growth Driven by Holidays and Cloud Computing

Amazon reported a 14% year-over-year increase in fourth-quarter revenue, reflecting resilient consumer spending during the holiday season. Total revenue climbed to $213.4 billion, up from $187.8 billion a year earlier and above analyst expectations of $211.4 billion. Net income rose to $21.2 billion, or $1.95 per share, compared with $20 billion, or $1.86 per share, in the prior-year quarter.

Despite the earnings beat on revenue, the Amazon Q4 earnings miss narrative took hold because profits fell just short of consensus estimates of $1.97 per share. For investors, the miss mattered less than what came next: Amazon’s aggressive spending outlook.

AWS Growth Reaccelerates, but Competition Looms

A bright spot in the quarter was Amazon Web Services, which delivered 24% revenue growth—the fastest pace in 13 quarters. AWS revenue reached $35.6 billion, surpassing expectations of $34.9 billion and marking a clear acceleration from the previous two quarters.

This momentum is critical as Amazon works to reassure markets that AWS can keep pace with Microsoft Azure from Microsoft Corp. (NASDAQ:MSFT) and Google Cloud from Alphabet Inc. (NASDAQ:GOOGL). Cloud computing has become a high-stakes battleground, with scale, performance, and AI capabilities shaping long-term market leadership.

Capital Expenditures Surge on AI Ambitions

What unsettled investors most was Amazon’s plan to raise capital expenditures to roughly $200 billion this year, up from $125 billion last year and well above the $147 billion analysts had anticipated. Management framed the spending as a strategic push into artificial intelligence, robotics, semiconductors, and satellite infrastructure.

Amazon is far from alone. Big Tech peers are also doubling down on AI. Alphabet recently disclosed plans to spend between $175 billion and $185 billion on capital expenditures, while Apple Inc. (NASDAQ:AAPL) and Meta Platforms Inc. (NASDAQ:META) are expected to significantly increase AI-related investments. Still, Amazon’s scale of spending raises near-term margin concerns, reinforcing the Amazon Q4 earnings miss reaction in the market.

Layoffs and Retail Restructuring Continue

Alongside higher spending, Amazon is continuing to streamline its workforce. The company is cutting approximately 16,000 corporate roles in a second round of layoffs within three months, following 14,000 job cuts in October. These reductions bring total layoffs to well over 30,000 since CEO Andy Jassy signaled broader organizational changes tied to efficiency and AI-driven processes.

Separately, Amazon is eliminating about 5,000 retail jobs as it closes nearly all Amazon Go and Amazon Fresh stores. The company is narrowing its physical retail focus, prioritizing online grocery delivery and its Whole Foods Market chain. Some shuttered locations are expected to be converted into Whole Foods stores.

Fulfillment, Grocery, and Same-Day Delivery Expansion

Even as it pulls back on certain retail formats, Amazon continues to invest heavily in its fulfillment network. Robotics, AI-powered logistics, and more efficient warehouses remain central to the company’s strategy. Amazon now delivers groceries in roughly 5,000 U.S. cities and towns, with same-day delivery available in many locations.

Strong customer feedback has encouraged the company to expand same-day grocery delivery further in 2026. This focus underscores Amazon’s belief that speed and convenience remain key differentiators, even as costs rise across labor, transportation, and technology.

Outlook for 2026 and Investor Concerns

Looking ahead, Amazon expects first-quarter revenue between $173.5 billion and $178.5 billion, compared with analyst projections of $175.6 billion. While the guidance suggests steady growth, uncertainty remains around cost pressures, global economic conditions, and potential tariff impacts under President Donald Trump’s trade policies.

Ultimately, the Amazon Q4 earnings miss reflects a tension between short-term profitability and long-term ambition. AWS growth, AI investment, and logistics innovation position Amazon for the future, but investors are grappling with the price of that vision. As 2026 unfolds, confidence in Amazon’s strategy will hinge on whether rising expenditures translate into sustained margins and market leadership.