Live Earnings: Will Amazon Shares Soar if AWS Blows Out Q4 Expectations?

Microsoft saw its worst day since the Covid crisis just days ago, and now Amazon is seeing a similar reaction.

Amazon shares were down 4.4% during regualr hours and now another 10% after hours. This is an extreme reaction. 

The bottom line is the market is in panic mode, we’ve seen several days of incredible momentum selling. During intraday trading yesterday, it was the 4th-worst day for momentum stocks since 1999.

Were Amazon’s earnings really bad enough to warrant a -14% reaction across today’s trading and after hours? In our opinion, it’s a little crazy!

Amazon has weakness on gross margins and an aggressive capital spending plan, but what’s the alternative? If the company spent $140 billion in capital expendtirues this year it would simply sell off as the year progressed on fears it was ‘falling behind’ the growth rates of other cloud companies.

Personally, I’m excited to buy more Amazon if the market hands me an outsized opportunity. This is still an incredible business with incredible supply logistics, huge advantages as robotics take off, and the largest cloud division in the world.

The first question from Wall Street on Amazon’s call was exactly what we predicted – what’s the return on capital from this $200 billion capex guide. 

A little odd CEO Andy Jassy didn’t anticipate this, but he’s been repeatedly underwhelming on conference calls.

Here’s the interaction from their call.

Mark Stephen Mahaney Evercore ISI Institutional Equities, Research Division

Okay. I think Brian, let me throw this to you or maybe to Andy, on the strong long-term return on invested capital, I think that’s the debate in the market today. So could you give us a little bit more insight into how do you think investors will be able to see that, either talk about the duration of the CapEx cycle that you’re going through now?

Or what we should see in terms of profitability levels? And maybe also talk about like other de minimis or minimum free cash flow generation levels, you don’t want to go below as you go through this CapEx cycle? Just help us get to that — get to your level of confidence in having a strong long-term return on that invested capital.

Brian Olsavsky Chief Financial Officer

Yes. Sure, Mark. I’ll start from the financial side. So on the investments we’re making, as Andy said earlier, we are putting into service with customers all capacity that we’re getting and it’s immediately useful, and we’re also seeing a long arc of additional revenue that we see from other customers in backlog and commitments to people, anxious to make with us, especially for AI services. So you can see that’s working its way into our P&L, both through CapEx and also through our operating margin in AWS.

AWS is a 35% operating margin through Q4, up 40 basis points year-over-year. You talked about before that is going to fluctuate over time. It’s certainly has a headwind from the investments in AI and the depreciation on that CapEx, but we also work very hard to offset that with efficiencies and cost reductions. So we will see how that develops over time. So — but yes, we see a long strong return on invested capital, see strong demand for these services, and we continue to like the investments in this area.

Andrew Jassy Chief Executive Officer

I would add to that. If you look at the capital we’re spending and intend to spend this year. It’s predominantly in AWS. And some of it is for our core workloads, which are our non-AI workloads because they’re growing at a faster rate than we anticipated. But most of it is AI, and we just have a lot of growth and a lot of demand. When you’re growing 24% year-over-year with an annualized revenue run rate of $142 billion, you’re growing a lot. And what we’re continuing to see is as fast as we install this capacity, this AI capacity, we are monetizing it.

And so it’s just a very unusual opportunity. As I’ve shared a lot of times, I passionately believe that every customer experience that we know of today is going to be reinvented with AI. There are going to be a whole bunch of customer experience that the none of us have ever imagined that are going to become the norm of how we all operate every day in what we use. And I think the other thing is that if you really want to use AI in an expensive way, you need your data in the cloud and you need your applications in the cloud. Those are all big tailwinds pushing people towards the cloud.

So we’re going to invest aggressively here, and we’re going to invest to be the leader in this space as we have been for the last number of years. We have, I think, a fair bit of experience over the years in AWS of forecasting demand signals and doing it in such a way that we don’t have a lot of wasted capacity and that we also have enough capacity to serve demand that’s there. And I think we’ve also proven with AWS over the years in how we build data centers and how we run them and how we invent in there. If you think about our chips and our hardware, our networking gear and how we’ve invented Empower that this isn’t some sort of quick sonic top line grab. We have confidence that we — that these investments will yield strong returns on invested capital. We’ve done that with our core AWS business, and I think that will very much be true here as well. And I think some of the things that you will see over time in the AI space is, you’re going to keep seeing all the inference services, which is going to be the majority of the long-term AI workloads is going to be inferenced. You’re going to see the inference keep getting optimized.

You’re going to see higher utilization on those services. You’ll see prices normalize over a period of time. And then I think the companies that have not just the excellence in infrastructure, but also the components that give them — give customers better price performance and give those companies themselves better economics are going to have advantaged financials.

And I think if you look — we’re already off to a really good start, having training underneath the majority of our Bedrock service and that’s not just giving customers better prices, but also gives us better economics. And so we see that following the same sort of patterns we saw in the early days of our core AWS investment. I’m very confident we’re going to have strong return on invested capital here.

If you’ve enjoyed tonight’s live blog, make sure to check out our AI Investor Podcast.

Every week I (24/7 Wall St Technology Analyst Eric Bleeker) break down the biggest news in the AI space.

So if you’re looking for the companies that will benefit from Amazon’s $200 billion capital expenditure plans, we’ll be breaking that down in the next episode!

It’s free to subscribe, so why not add it to your favorite podcast player?

Amazon’s conference call is still going and Andy Jassy just gave an update on the company’s satellite business.

“We’ve launched 180 satellites, have more than 20 launches planned in 2026 and more than 30 in 2027 and expect to launch commercially in 2026. I — we have dozens of commercial agreements already signed, including with AT&T, DIRECTV Latin America, JetBlue in Australia’s national broadband network and have many more on the way. It’s been an action-packed year of innovation and progress, and we’ve hit the ground running in 2026. ”

With SpaceX preparing an IPO that could be in the $1.5 trillion range (not far below Amazon’s current valuation), it will be interesting if Amazon steps on the accelerator on its space ambitions. It could provide an advantage if data centers in space become a major trend next decade.

We’re on Amazon’s conference call, and shares are sliding as it continues.

There’s been a lack of specificity around Amazon’s spending plans, which likely isn’t helping.

As we noted earlier in this live blog, Wall Street will want to know what kind of growth rates AWS could accelerate to and more clarity around spending ROI.

So far, Amazon hasn’t provided this, which is putting pressure on shares during the call.

There’s a chance the Q&A section from analysts could provide some upside, but our guess is shares will open down in the 10% range tomorrow as this call does little to change how Wall Street looks at Amazon’s earnings release.

Here’s what Amazon CEO Andy Jassy had to say about the company’s AWS division as he opened tonight’s conference call:

“Thanks, Dave. We’re reporting $213.4 billion in revenue, up 12% year-over-year, excluding the impact from foreign exchange rates. Operating income was $25 billion and trailing 12-month free cash flow was $11.2 billion. We’re seeing strong growth. And with the incremental opportunities available to us in areas like AI, chips, low earth orbit satellites, quick commerce and serving more consumers everyday essentials needs. We have a chance to build an even more meaningful business in Amazon in the coming years with strong return on invested capital, and we’re investing to do so. We’re already seeing strong demand in these areas even in these early innings. .

I’ll start with AWS. AWS growth continued to accelerate to 24%, the fastest we’ve seen in 13 quarters, up $2.6 billion quarter-over-quarter and nearly $7 billion year-over-year. AWS is now a $142 billion annualized run rate business, and our chips business, inclusive of Graviton and Trainium is now over $10 billion in annual revenue run rate, growing triple-digit percentages year-over-year.

As a reminder, it’s very different having 24% year-over-year growth on a $142 billion annualized run rate then to have a higher percentage growth on a meaningfully smaller base, which is the case with our competitors.

We continue to add more incremental revenue and capacity than others and extend our leadership position. We’re continuing to see strong growth in core non-AI workloads as enterprises return to focusing on moving infrastructure from on-premises to the cloud, along with AWS having the broadest functionality, strongest security and operational performance and most vibrant partner ecosystem.

AWS continues to earn most of the big enterprise and government transitions to cloud. Since our last call, we announced new agreements with OpenAI, Visa, NBA, BlackRock, Perplexity, Lyft, United Airlines, DoorDash, Salesforce, U.S. Air Force, Adobe, Thomson Reuters, AT&T, S&P Global, National Bank of Canada, the London Stock Exchange, Choice Hotels, Accenture, Indeed, HSBC, CrowdStrike and many more. More of the top 500 U.S. startups use AWS as their primary cloud provider and the next 2 providers combined.”

If you want updates, leave this page open, we’ll post updates as it goes.

If you just landed on this blog, you can scroll down for previous updates.

Amazon’s conference call begins at 5:00 PM ET, and investors will listen for management’s commentary on capital expenditure plans following today’s selloff.

Top 5 Questions Analysts Will Ask

• AWS Growth Trajectory: Can management justify expectations for AWS revenue growth given competitive pressure from Google Cloud’s 48% YoY growth?
• Capex ROI Timeline: When will increased infrastructure investment translate to margin expansion?
• AI Infrastructure Monetization: What’s the revenue ramp for Trainium2 chips and AI services?
• Q1 Guidance:  Gross margins are weak in Q1. What’s the explanation?

Red Flags to Watch

Vague answers on AI monetization timelines, defensive tone on capex spending, or weak commentary on enterprise cloud demand would concern investors rattled by an already signfiicant weekly decline.

Amazon’s inline Q4 earnings and massive $200 billion 2026 capex guidance triggered a sharp sell-off, with shares down 7% after hours following a 4.4% decline during regular trading. The reaction makes sense given recent market behavior.

After eight consecutive quarters of 20%+ EPS beats, investors expected outperformance—not an inline result. The $200 billion capex figure significantly exceeds Google’s $180 billion guidance and raises margin concerns, especially with Q1 operating margin guided to 10.8%.

The market has brutally punished any earnings weakness this season. Meta and Alphabet delivered stronger beats with clearer AI monetization paths. Amazon’s inline quarter—while solid in isolation—represents a deceleration from recent momentum.

Amazon shares had initially fallen nearly 11% after-hours but are now down ~6.8%. as of 4:30 p.m. ET.

The next big movement we could see from the stock would come during the company’s conference call, that begins at 5:00 p.m. ET.

If you leave this page open you’ll continue receiving updates as we listen to the call. 

Why are Amazon shares down so much after hours? As we’ve noted, earnings were largely inline, which has been punished this earnings season.

The company also issued a massive capital expenditure number for 2026.

And another concern is operating margins for Q1 are guided to just 10.8%, which is significantly below Wall Street’s expecations of 10.8%.

Gross margns in Q1 are likely weighing on the stock after hours in a lage way.

Amazon is no longer at the bottom of its trading range, shares were down 11% earlier but have rebounded and are now down about 7%.

What the company says about its capital expenditure plans on its conference call (and what commentary they provide on potential future growth rates for AWS) could lead to a large swing in share price.

Let’s dig into Amazon’s forward Q1 guidance.

They’re issuing a range of $173.5B to $178.5B.

Wall Street expected $175 billion. That’s a beat at the midpoint, but Wall Street seems far more focused on the $200 billion capital expenditure figure.

The level of Amazon’s beat also pales in comparison to what Meta and Alphabet issued during this earnings season.

Wow, Amazon is guiding to $200 billion in capex in 2026. That’s higher than Google ($180 billion) and Meta (up to $135 billion).

The Street may be concerned about this as its significantly above expectations.

Amazon shares are crashing, down 9% after dropping another 4% during today’s trading.

The market has been absolutely brutal this earnings season selling off any level of weakness. Amazon’s inline earnings let to a poor initial reaction.

However, the longer Wall Street has looked at earnings the worse the sell-off has become as revenue guidance is also inline.

Amazon just reported earnings. Here’s the headline figures:

• Revenue: $213.4 billion
• EPS: $1.95

As a reminder, here’s what Wall Street expected:

• EPS: $1.95
• Revenue: $211 billion

Shares are immediately down 3% as the company reports inline EPS. 

We expect Amazon earnings to drop shortly after the closing bell. Here’s what you need to do to get prepared:

• Know the numbers to watch: Wall Street expects revenue of $211 billion and EPS of $1.95. The most important figure will be AWS growth rates.
• Stay on this live blog for updates: We’ll be posting news and analysis right after earnings drop, simply stay on this live blog and new updates should appear automatically.
• Check out the AI Investor Podcast: Whether Amazon outperforms or not across the next five years will be driven by AI and how much AWS succeeds against rival AI clouds. Make sure to subscribe to our AI Investor Podcast to get all the biggest news and stock recommendations delivered to your favorite podcast player.

Amazon shares are down 4.5% in late trading, which is among the biggest drops for Magnificent 7 stocks today.

Microsoft shares are also down more than 5% while NVIDIA is down 1%.

Its a broad sell-off of technology stocks, but investors are fleeing Amazon before earnings. There’s likely some fear of a massive capital expenditures guidance figure that could lead to selling pressure tomorrow.

Alphabet delivered flawless earnings yesterday (including cloud growth rates that smashed Wall Street expectations) but is down .9% today after announcing guidance of $180 billion in capital expenditures in 2026.

Prediction markets give Amazon 97% odds of beating earnings tonight.

That’s higher than any other company reporting after the bell.

Prediction markets assign Reddit a 93% chance, Roblox a 32% chance, and Microchip an 80% chance.