Amazon's Q4 2025 Results Show Strong Growth, But AI Investment Concerns Weigh on Stock

Amazon reports 14% YoY revenue growth to $213.4B and 6% net income growth to $21.19B, beating expectations, but shares drop 10%+ after hours due to concerns over increased AI spending and mixed guidance.

Amazon.com, Inc. (NASDAQ: AMZN) delivered strong fourth-quarter 2025 financial results, reporting revenue of $213.4 billion, up 14% year-over-year, and net income of $21.19 billion, up 6% YoY. The company also reported earnings per share of $1.95, slightly below the estimated $1.97 per share. Despite beating revenue expectations, Amazon's stock plunged more than 10% in after-hours trading as investors reacted to the company's increased capital expenditure forecast and mixed guidance for the coming quarter.

AWS Continues Strong Performance Amid AI Investment

The company's cloud computing division, Amazon Web Services (AWS), showed particularly strong growth, with revenue up 24% year-over-year to $35.6 billion, exceeding analyst expectations of $34.9 billion. AWS operating income also increased by 17% YoY to $12.5 billion. This robust performance comes as Amazon continues to invest heavily in artificial intelligence infrastructure and capabilities.

Amazon announced it is boosting its capital expenditure forecast for 2026 to $200 billion, reflecting the company's aggressive push into AI infrastructure. This significant increase in spending has raised concerns among investors about near-term profitability, despite the long-term growth potential of these investments.

Advertising and Subscription Services Show Healthy Growth

Amazon's advertising business continued its strong momentum, with revenue up 23% year-over-year to $21.32 billion, slightly above market expectations. The company's subscription services also grew by 14% to $13.12 billion, demonstrating the continued strength of Amazon's diversified revenue streams.

Market Context and Competitive Landscape

The earnings report comes amid a broader market selloff in technology stocks, with the Nasdaq dropping 1.8%+ and the S&P 500 falling 1.5%+ in intraday trading. Software stocks have been particularly affected by investor fears about AI-driven disruption, though Amazon's diversified business model provides some insulation from these concerns.

Amazon's results contrast with those of other major tech companies. While Microsoft and Alphabet have also reported strong cloud growth, Amazon's more measured approach to AI development and its focus on practical applications have positioned it well in the current market environment.

Looking Ahead

Despite the after-hours stock decline, Amazon's fundamental business remains strong. The company's ability to grow revenue across multiple segments while maintaining profitability demonstrates the resilience of its business model. The increased investment in AI infrastructure, while concerning to some investors in the short term, positions Amazon to compete effectively in the rapidly evolving technology landscape.

The market's reaction underscores the delicate balance tech companies must strike between investing in future growth opportunities and meeting near-term profitability expectations. As Amazon continues to expand its AI capabilities and infrastructure, investors will be watching closely to see how these investments translate into future revenue growth and market share gains.