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Amazon misses Q4 profit estimates despite growth in cloud computing business

Published: 06 Feb. 2026, 12:38 Updated: 06 Feb. 2026, 13:38

Amazon Ireland's corporate offices in Dublin is seen on Oct. 28, 2025. [REUTERS/YONHAP]

Amazon sales surged 14 percent during the fourth quarter of 2025 due to strong holiday spending and better-than-expected growth in its prominent cloud computing unit.

But the Seattle-based online behemoth’s shares fell nearly 10 percent in after-hours trading, as its profits came in slightly below analysts’ expectations. Investors also did not seem to like Amazon’s announcement on Thursday that it was increasing its capital expenditure to $200 billion this year, up from $125 billion last year, as it sees opportunities in artificial intelligence, robots, semiconductors and satellites.

Wall Street analysts were expecting Amazon’s spending to rise to around $147 billion this year, according to FactSet.

The results come as the e-commerce company is slashing about 16,000 corporate jobs in the second round of mass layoffs in three months. It said that most of these cuts are part of an effort to reduce the workforce that swelled during the pandemic, not because of AI.

Separately, Amazon said it would cut about 5,000 retail workers, according to its notices to state workforce agencies in California, Maryland and Washington, resulting from its decision to close almost all of its Amazon Go and Amazon Fresh stores.

That’s on top of a round of 14,000 job cuts in October 2025, bringing the total to well over 30,000 since Amazon CEO Andy Jassy first signaled a push for AI-driven organizational changes.

Analysts are analyzing retailers’ performances for insight into how shoppers spent during the holidays and what’s in store for 2026. They also want to know how the online behemoth is managing cost increases, given the uncertainty around U.S. President Donald Trump’s tariffs.

The Amazon logo is seen in this photo taken on Feb. 11, 2025. [REUTERS/YONHAP]

Amazon is also under pressure to shore up confidence that its computing arm Amazon Web Services (AWS) is just as powerful as Microsoft’s Azure and Google’s Google Cloud platforms.

Amazon delivered 24 percent growth for AWS in the fourth quarter of last year, the fastest in 13 quarters, the company said. That followed 20 percent growth in the third quarter and a 17.5 percent increase in the second.

Meta, Apple and other Big Tech firms are expected to ramp up their spending on artificial intelligence this year. After pouring $91 billion into capital expenditures devoted mostly to AI, Alphabet, the parent company of Google, disclosed on Wednesday that it expects to double down by spending another $175 billion to $185 billion this year.

Amazon also continues to invest in its speedy fulfillment network through a combination of robotics, AI technology and more efficient warehousing.

The online retailer said that it now delivers groceries in 5,000 U.S. cities and towns. In many of them, customers can get same-day delivery for fresh produce and other perishables. Based on strong customer feedback, the company plans to expand its same-day delivery to more places this year.

Amazon is also reworking its physical store footprint.

The logo of Amazon is seen outside its logistics center in Baldonnell Business Park in Dublin on Oct. 28, 2025. [REUTERS/YONHAP]

Last week, it said that it was closing almost all of its Amazon Go and Amazon Fresh locations within days, as it narrows its focus on food delivery and its grocery chain, Whole Foods Market.

Some of the shuttered stores will be converted into Whole Foods locations, the company said in a blog post last week.

Amazon reported net income of $21.2 billion, or $1.95 per share, for the three-month period ending on Dec. 31, 2025. That compares with $20 billion, or $1.86 per share, for the same period in the previous year.

Revenue rose to $213.4 billion in the fourth quarter of last year, compared to $187.8 billion in that same timeframe a year ago.

Analysts were expecting $1.97 per share on sales of $211.4 billion, according to analysts polled by FactSet.

Revenue from AWS reached $35.6 billion. Analysts were expecting $34.9 billion.

The company said that it expects sales to be between $173.5 billion and $178.5 billion for the first quarter of this year. Analysts are projecting $175.6 billion.

AP