Amazon Inc. shares retreated in early March trading as broader market risk-off sentiment from escalating Middle East conflict pressured tech names, compounding investor caution over the company's massive $200 billion capital expenditure plan for 2026 focused on AI infrastructure and cloud expansion.

For the full year 2024, Amazon's net income jumped to $59.2 billion from $30.4 billion in 2023
Amazon AFP

The e-commerce and cloud computing giant's stock (NASDAQ: AMZN) traded around $206-207 in mid-morning sessions on March 3, 2026, down about 1.5-2% from the prior close of $210.00 on Feb. 27. Pre-market activity showed levels near $205-206, reflecting a pullback from recent ranges of $203-211. The stock has hovered 18-20% below its 52-week high of $258.60 reached in November 2025, with a low of $161.38 earlier in the year. Year-to-date performance remains positive but tempered by February's volatility, including a nine-day losing streak in mid-February that erased over $450 billion in market value before a brief rebound.

Amazon's latest earnings, released Feb. 5, 2026, for the fourth quarter of 2025, delivered strong results but sparked mixed reactions. Full-year 2025 net sales reached approximately $717 billion, surpassing Walmart's $713 billion for the first time in annual revenue and marking a milestone in retail dominance. Fourth-quarter revenue hit record levels, with AWS contributing $35.6 billion — up 24% year-over-year — its fastest growth in 13 quarters, driven by surging demand for AI workloads.

Operating income expanded significantly, with AWS delivering $12.5 billion in the quarter. CEO Andy Jassy highlighted AWS's "top-to-bottom AI stack" as a key differentiator, enabling customers to run AI alongside existing applications and data. Advertising revenue also accelerated, supporting profitability across segments.

The outlook, however, weighed on sentiment. Amazon guided for about $200 billion in 2026 capital expenditures — far exceeding consensus estimates around $146 billion — primarily for data centers, custom chips like Trainium, networking and AI infrastructure. Jassy described the spending as fueling "seminal opportunities" in AI, robotics, chips and low-Earth orbit satellites, with expectations of strong long-term returns on invested capital.

Guidance for the first quarter of 2026 projected net sales between $173.5 billion and $178.5 billion (11-15% growth) and operating income of $16.5-21.5 billion, incorporating higher costs from projects like Amazon Leo and international pricing investments.

A major boost came from a landmark Feb. 27 announcement: Amazon's $50 billion investment in OpenAI as part of the startup's $110 billion funding round, valuing OpenAI at $840 billion. The deal expands an existing AWS agreement by $100 billion over eight years, with OpenAI committing to 2 gigawatts of Trainium capacity (including next-gen Trainium4 in 2027) and gaining exclusive third-party distribution for its Frontier enterprise agent platform. OpenAI will also help develop customized AI models for Amazon's consumer businesses.

Analysts view the partnership as positioning AWS strongly in the AI race, potentially adding $17 billion annually in revenue (about 11% of expected 2026 AWS totals) and accelerating cloud adoption. UBS projects AWS growth surging to 38% in 2026 from 19% in 2025, with mid-30% momentum possibly extending into 2027.

Despite the positives, shares have faced pressure from elevated spending concerns, potential delays in ROI from AI buildouts and broader tech sector dynamics. Free cash flow projections turned negative for 2026 in some estimates due to capex intensity, though management stresses long-term value.

Market capitalization stands near $2.2-2.3 trillion, with a forward P/E around 29 — near a 10-year low and seen as attractive by bulls. Analysts maintain a consensus "Buy" rating, with average price targets around $280-282, implying 30-35% upside from recent levels.

Amazon continues diversifying: retail innovations in India via seller fee cuts, quick commerce investments and robotics advancements. North America operating margins improved to 9% in Q4 2025, while international segments showed progress.

As geopolitical risks and macro uncertainties persist, Amazon's blend of e-commerce scale, AWS dominance and aggressive AI positioning keeps it central to tech narratives. Upcoming data on AI adoption, capex execution and Q1 results (expected late April) will guide near-term trajectory.

Investors weighing the heavy spending against accelerating cloud/AI momentum see Amazon as a high-conviction long-term play, even amid short-term volatility.