Amazon's Q4 2025 Earnings Summary
On February 5, 2026, Amazon.com Inc. (AMZN) reported its fourth-quarter earnings for 2025, showcasing a mix of impressive revenue growth and concerns over rising capital expenditures. The company concluded the year with record-breaking results, yet the market's enthusiasm was tempered by its ambitious investment plans.
Key Financial Highlights
- Revenue: $213.4 billion, a 13.6% increase year-on-year, surpassing analyst expectations by approximately $2.17 billion.
- GAAP Earnings Per Share (EPS): $1.95, slightly below the consensus estimate of $1.96.
- Operating Income: Approximately $25.0 billion, up from $21.2 billion the previous year, despite facing $2.44 billion in one-off charges related to tax disputes and severance costs.
- Amazon Web Services (AWS): Revenue of $35.6 billion, reflecting a 24% year-on-year growth, an acceleration from the previous quarter's 20% growth.
- Regional Performance: North America generated $127.1 billion (+10% y/y), while international sales reached $50.7 billion (+17% y/y).
Q1 2026 Guidance
For the first quarter of 2026, Amazon provided guidance for net sales between $173.5 billion and $178.5 billion, indicating an 11-15% year-on-year growth, which exceeds the consensus estimate of $173.2 billion. However, the operating income forecast of $16.5 billion to $21.5 billion fell short of market expectations of around $22 billion.
Investment Strategy and Concerns
Amazon's planned capital expenditures for 2026 are projected to reach a staggering $200 billion, a significant increase from $125 billion in 2025. This investment is aimed at scaling the Amazon Leo AI model, expanding infrastructure, and enhancing "quick commerce" capabilities. While the revenue growth is commendable, the substantial increase in capex has raised concerns among investors regarding future free cash flow and profitability.
Market Reaction
The announcement of high capital expenditures coupled with a conservative operating income forecast led to a sharp decline in Amazon's stock price. In after-hours trading, shares fell by as much as 10%, following a 4% drop during regular trading hours. The stock is currently trading around $200, marking a significant decline of approximately 25% from its all-time highs.
Conclusion
Amazon's fourth-quarter results illustrate a company that is successfully driving top-line growth while grappling with increasing costs. The strong performance of AWS highlights the potential of AI-driven investments, yet the market's reaction underscores the need for tangible returns on the substantial capital being deployed. Investors will be closely monitoring how these investments translate into future profitability.