Amazon Expects to Spend $220 Billion in 2026 as Investors Worry About AI Returns
Key Facts
Amazon shares fell 7% in after-hours trading on October 29 after the company reported third-quarter results and reaffirmed its plan for $220 billion in capital spending in 2026, most of it to build data centers for artificial intelligence. Investors focused on the core business and concerns about cash burn as heavy investment in the sector continues, according to the Associated Press. The reaction came despite a 12% increase in net sales to $201.94 billion for the quarter, from $180.17 billion in the same period a year earlier. Chief Executive Andy Jassy told investors that "the opportunity remains exceptional." The results reflect a contrast between strong growth in cloud activity and market questions about the cost of building the capacity needed to meet demand.
Amazon Web Services, AWS, recorded sales of $46 billion in the quarter ended September 30, up 39.3% year over year. Growth accelerated from 37% in the second quarter to its highest level in about five years, the company said, as reported by the Associated Press. The performance puts cloud computing at the center of the company’s results as it continues to direct major investments toward the data centers and chips needed to run AI applications. Jassy said Amazon installs an AI chip about every 14 seconds. He added that customers are using the capacity the company provides "almost as fast as we install it," and said they are "gobbling it up."
Despite growth in sales and cloud services, spending concerns weighed on the stock after the results were announced, with shares falling 7% in after-hours trading, according to the Associated Press. Amazon shares had closed at $243.79 on October 29, according to EL7 data. That closing price shows the stock’s value at the end of the session, while the decline came after the close following the results; the price alone does not establish a broader sell-off. Investors’ concerns, according to the news agency, centered on the core business’s ability to keep pace with investment commitments and on cash burn. The announced spending plan of $220 billion remains central to those concerns, with most of it directed toward AI infrastructure.
AI spending pressures also extended to European markets in the days surrounding the results, but Spanish companies faced a local factor linked to Brazil as well. After Luiz Inácio Lula da Silva won the election, Santander shares fell about 4% and Telefónica shares fell 7.2% in early trading on Monday, October 26, according to Dow Jones Newswires. Benjamin Toms, an analyst at RBC Capital Markets, said Lula "is seen as the less market-friendly candidate because of weak fiscal discipline." These concerns link the election outcome to Spanish companies’ exposure to the Brazilian economy. In the first round, Jair Bolsonaro led Lula by more than 2.2 million votes before Lula won the runoff; it was the first time since military rule ended in 1985 that the candidate who finished second in the first round won the presidency, according to the Associated Press.
Brazil is Santander’s second-largest market and contributed about 15% of the group’s profits in 2025, with pre-tax profit of 3.22 billion euros, according to Dow Jones Newswires. That weight gives the Brazilian market a direct bearing on the bank’s performance, alongside the effect of political and fiscal developments on investors’ assessment of its exposure there. Telefónica operates in Brazil under the Vivo brand, and its Brazilian unit generated revenue of 9.45 billion euros in 2025, or 28% of the company’s revenue. This places the Brazilian market among the Spanish group’s main revenue components. The two stocks’ losses after the election therefore came in the context of tangible economic exposure to Brazil, rather than as a unified move across all European stocks.
On its operating outlook, Amazon said it expects fourth-quarter sales of between $240 billion and $247 billion, an increase of between 12% and 16% year over year. The average analyst estimate compiled by FactSet was $244.16 billion. These forecasts set a range for expected sales in the final quarter of the year, while the announced level of capital investment remains a factor in how investors assess the results. In Brazil, the central bank’s Monetary Policy Committee is due to meet on November 3 and 4, with November 4 as the second day of the meeting. The meeting is the next point for investors to watch monetary policy in a market with significant weight for Santander and Telefónica.