February 9, New York (Amazon Stock Slides Despite Strong Results) — Amazon did almost everything right in its latest earnings report. Sales were strong, profits were solid, and its powerful cloud business grew faster than it has in years. Yet instead of celebrating, Wall Street sent Amazon’s stock sharply lower.
Shares of Amazon fell as much as 9 percent after the report, surprising many investors and analysts. The reason was not poor performance. It was fear. Investors are worried about how much money Amazon plans to spend next and whether that spending will truly pay off.
At the center of the debate is Amazon’s massive plan to invest $200 billion by 2026, mainly to expand its cloud and artificial intelligence businesses.
Strong Results, Weak Stock Reaction
On paper, Amazon’s quarter looked like a clear win. The company reported $213.4 billion in sales, up 14 percent from last year. Profits also jumped, with net income reaching $21.2 billion, or $1.95 per share.
The biggest highlight was Amazon Web Services, also known as AWS. AWS is the part of Amazon that rents computing power to other companies, and it continues to be Amazon’s biggest money-maker. AWS sales rose 24 percent from a year ago to $35.6 billion, marking its fastest growth in more than three years.
AWS alone generated $12.5 billion in operating income during the quarter. That means AWS is doing much of the heavy lifting when it comes to Amazon’s profits.
Normally, numbers like these would push a stock higher. But investors quickly shifted their focus away from results and toward the future costs Amazon is taking on.
The $200 Billion Question That Spooked Investors
The biggest concern for investors is Amazon’s plan to spend $200 billion over the next few years on data centers, servers, and AI infrastructure. While this spending is meant to keep Amazon ahead of competitors, it also raises questions about cash flow.
Amazon’s operating cash flow jumped 20 percent to nearly $140 billion, which shows the business is generating plenty of money. But free cash flow, the money left after spending on big projects, dropped sharply to $11.2 billion, down from $38.2 billion a year earlier.
This is where investors got nervous.
Some worry that big tech companies like Amazon are changing from light, flexible businesses into capital-heavy giants that need to spend enormous sums just to stay competitive. Across the tech industry, companies are planning to spend more than $600 billion on AI by 2026, according to reports.
Bank of America, however, sees the spending as necessary. The firm kept a buy rating on Amazon and set a $275 price target. Analysts said the spending is not a luxury, but a requirement to win the AI and cloud race.
Their message was simple: build now, earn later.
What Amazon Must Prove Going Forward
Amazon’s leadership agrees that the next few years will be about execution. CEO Andy Jassy has been clear that the company is investing heavily now so it can handle future demand.
Still, there are risks. Power shortages in parts of Europe could slow the opening of new data centers. Regulators in Germany are examining Amazon’s marketplace practices. The company also reached a $309 million settlement over U.S. returns and announced plans to cut 16,000 corporate jobs to improve efficiency.
Amazon’s outlook for early 2026 shows steady growth but slightly weaker profits, as investments weigh on margins. That means investors will be watching closely to see whether spending turns into real returns.
Three things will matter most: how fast AWS keeps growing, how efficiently Amazon turns spending into usable capacity, and whether free cash flow begins to recover.
Amazon delivered strong results this quarter. Now, the market wants proof that the $200 billion bet will pay off.
Do you think Amazon’s massive investment in AI and cloud will reward patient investors, or is the spending too risky? Share your thoughts in the comments below.
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