Episode summary
Instant Reaction: Amazon Boosts Spending Far Ahead of Estimates | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 25 min · Hosts: Carol Massar, Tim Stenovec · Guests: Poonam Goyal, James Cakmak
Summary
Amazon’s fourth quarter was broadly in line to slightly better on operating performance, but investors focused on a much larger-than-expected 2026 capital spending plan. The company said capex would reach about $200 billion, far above the $146.11 billion Street estimate, and the stock fell sharply after hours as traders worried the payoff from AI investment may take longer than hoped.
The company also guided first-quarter net sales to $173.5 billion to $178.5 billion versus a midpoint near estimates, while first-quarter operating income of $16.5 billion to $21.5 billion came in well below expectations. Fourth-quarter AWS revenue of $35.58 billion and North America retail margins were described as solid, and the panel said the quarter itself was not the problem. The real issue was the scale of spending on AI chips, data centers, robotics, and other projects.
Poonam Goyal argued that Amazon needs to keep investing and that the long-run story remains intact, while James Cakmak said the market is once again demanding proof of return on capital. Both stressed that investors want more clarity on where the money is going and what the eventual ROI will be.
Key takeaways
- Amazon’s 2026 capex plan of about $200 billion was the main shock, blowing past the $146.11 billion estimate and sending the shares down as much as 11% after hours.
- The company’s first-quarter operating income guide of $16.5 billion to $21.5 billion was materially below the Street’s $22.24 billion expectation.
- AWS revenue growth and retail margins were described as solid, suggesting the quarter was operationally healthy even as guidance disappointed.
- Poonam Goyal said the spending is necessary to catch up in cloud and AI, and she still sees the long-term narrative as positive.
- James Cakmak said investors now care again about earnings, free cash flow, and return on spend, especially across mega-cap tech.
Notable quotes
“the one that you hit that really sticks out Carol is first quarter net sales that outlook sees uh net sales 173.5 to 178.5 billion”
“Amazon sees first quarter operating income uh coming in this is really light 16.5 billion to 21.5 billion”
“2026 capex about $200 billion. That way exceeds estimates”
“the company saying that AWS growing 24% our fastest growth in 13 quarters advertising growing 22% stores growing briskly across North America international chips business growing tripledigit percentages year-over-year”
“We were looking for $140 billion, $200 billion. Um, just continues to show that they're investing”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.
So, this is for the fourth quarter, the look back. Uh, we're looking at EPS $1.95 uh a share. That's a penny light from what the street was expecting.
fourth quarter operating margin that came in smack uh on in line with what the street was uh forecasting 11.7%. Here's to the outlook. Amazon sees first quarter net sales 173.5 billion to 178.5 billion.
The estimate on the street kind of in the middle of that 175.54 billion. So um maybe potentially it could be below that based on that range. Taking a look at shares of Amazon in the aftermarket
Down by about 4.4%. Now 3.9%. Bouncing around a little bit but still lower by 2 and a half% now. — Yeah, they are definitely bouncing around. So let's see. Let's go through some more of the numbers.
Yeah, the one that you hit that really sticks out Carol is first quarter net sales that outlook sees uh net sales 173.5 to 178.5 billion. That's within estimates of 175.54 billion. Amazon sees first quarter operating income uh coming in this is really light 16.5 billion to 21.5 billion.
The estimate was for 22.24 billion. So profit expected to take a hit at least not looking like what analysts wanted to see. Again 22.424 billion is what analysts wanted to see.
First quarter operating income set to look 16.5 to 21.5 billion.
All right let's continue with a look back there. fourth quarter uh North America net sales 127.08 billion. The estimate was slightly above that at 127.21 billion. — You seeing this capex number now we're getting the good stuff.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- amazon capex
- ai data center spending
- chip investments
- investor concerns
- quarterly property and equipment
Companies and tickers mentioned
- AMZN
- Amazon
- Clockwise Capita
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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