Episode summary
Instant Reaction: Amazon Boosts Spending Far Ahead of Estimates | Bloomberg Daybreak: US Edition
Bloomberg Daybreak: US Edition
· · Hosts: Carol Massar, Tim Stenovec · Guests: Poonam Goyal, James Cakmak
Summary
Amazon’s fourth-quarter results were solid on sales and margins, but the stock sold off sharply because management said 2026 capital expenditures would rise to about $200 billion, far above the $146.11 billion street estimate. The host framed that as the headline, noting that investors were also digesting first-quarter operating income guidance of $16.5 billion to $21.5 billion versus an estimate of $22.24 billion, even though first-quarter net sales guidance was roughly in line with expectations.
Poonam Goyal argued that the spending increase is not a sign of weakness but a reflection of Amazon’s need to keep investing in cloud infrastructure, AI and chips. She said the underlying quarter was “good to okay,” with AWS growing 24%, advertising up 22%, and North America margins slightly ahead of expectations. She also said investors will want more detail on where the capex is going, especially the AWS backlog and the use of AI in retail tools like Rufus and Alexa Plus.
James Cakmak took a more cautious market view, saying the market is once again focusing on earnings, free cash flow and return on spend. He said semiconductors look like the clearest beneficiary of hyperscaler spending, while Amazon’s large capex plan reflects a broader valuation reset across big tech as investors demand clearer ROI.
Key takeaways
- Amazon’s 2026 capex guide of about $200 billion was the main shock, versus a $146.11 billion estimate, and the stock fell as much as 11% after hours.
- Poonam Goyal said Amazon’s quarter was solid enough to support the long-term bull case, with AWS up 24%, advertising up 22% and North America margins ahead.
- The host noted first-quarter operating income guidance of $16.5 billion to $21.5 billion was below the Street’s $22.24 billion estimate, adding pressure to the shares.
- James Cakmak said the market is refocusing on return on spend and valuation, and he sees semiconductors as the clearest relative beneficiary of hyperscaler capex.
- Goyal said investors want more clarity on where the capex goes, including AWS backlog, AI retail tools and whether more restructurings are coming.
Notable quotes
“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. That estimate was for 146.11 billion”
“the long run narrative here is still good. The underlying results were solid across both AWS and retail”
“With such strong demand for our existing offerings and seminal opportunities like AI chips, robotics, and low Earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026”
“we continue to spend all this money, but what is the ROI on this capex”
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 centers
- semiconductor demand
- investor expectations
- capital expenditure outlook
Companies and tickers mentioned
- AMZN
- Amazon
- Clockwise Capital
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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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