Amazon shares tumbled on Thursday night as investors reacted to plans for a dramatic increase in spending on artificial intelligence infrastructure, extending a broader sell-off across the technology sector. The company said it would pour around $200bn (£148bn) into capital expenditure, triggering concerns about costs and future returns.
Andy Jassy, Amazon’s chief executive, said capital spending would rise by roughly 60pc as the company races to keep its cloud computing arm ahead of competitors. The announcement came just a day after Google revealed it would double its own AI investment to $185bn, highlighting the escalating arms race among the world’s biggest tech firms.
In after-hours trading, Amazon shares fell by as much as 10pc, erasing close to $250bn from its market value. The drop came despite strong recent financial performance. Amazon reported that profits rose 31pc last year to $77.7bn, while revenues increased 12pc to $717bn. However, the company warned that profits could dip in the first quarter of 2026 as higher costs from investment and restructuring take effect.
Mr Jassy, who has overseen tens of thousands of job cuts in recent months, said Amazon would pay $730m in severance. He defended the spending surge, arguing it was driven by surging demand for Amazon Web Services. “Customers really want AWS for core and AI workloads, and we’re monetising capacity as fast as we can install it,” he told investors.
Technology groups have ramped up spending on data centres, semiconductors and energy infrastructure as they compete for leadership in AI. Publicly listed tech companies are expected to invest about $500bn in AI in 2026, with privately held firms adding billions more.
Amazon’s commitment exceeds that of rivals such as Microsoft and Meta, whose own spending plans have also unsettled investors. Fears that AI investments may not deliver the promised returns have weighed heavily on markets, dragging down the Nasdaq, the Dow and the S&P 500 by more than 1pc.
