Why Amazon Stock Dropped This Week

Core Viewpoint - Amazon is aggressively investing in artificial intelligence and related technologies, leading to a significant forecast of $200 billion in capital expenditures for 2026, which has caused a drop in its stock price [1][5]. Financial Performance - Amazon's fourth-quarter revenue increased by 14% to $213 billion, while operating income rose by 18% to $25 billion, driven by growth across its retail, advertising, and cloud sectors [3]. - The company's gross margin stands at 50.29% [5]. Capital Expenditure Insights - CEO Andy Jassy indicated that the company expects to invest approximately $200 billion in capital expenditures in 2026, citing strong demand for AI services, custom semiconductor chips, warehouse automation, and space-based internet offerings [5][6]. - Wall Street had anticipated a capital expenditure of around $150 billion, making the additional $50 billion a surprise that led to investor concerns and a sell-off of shares [7].