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Amazon’s post earnings flop signals no relief for tech stocks

ADMIN || 6th February 2026

Amazon fell about 10% in post-market trading after announcing $200 billion of planned spending and reporting in-line earnings. Amid a broader selloff in software companies, the market needed something a little more impressive, but the outlook for Q1 revenue failed to move the needle. While growth at Amazon Web Services, the company’s core cloud business, is accelerating, so far there’s not much sign of capital spending translating into increases in cash flow.

Taken together, four large hyperscalers -- Alphabet, Amazon, Meta and Oracle -- have announced $570 billion of spending this year. That’s up 74% from $328 billion last year. The growth alone is roughly 80 bps of US GDP. So these are huge numbers that will make a meaningful difference to US economic growth and support chipmakers in Taiwan and South Korea. However, investors are clearly wary as cryptocurrencies collapse, doubts about SaaS sap confidence and traders await the possible announcement of a new model from DeepSeek as soon as this month. There was nothing in Amazon’s results to prevent a deepening of the selloff into Friday.

Amazon CEO Andy Jassy offered a defense of the ambitious expenditure. The company has a backlog of $244 billion, up 40% year-on-year (Alphabet said its backlog grew 55% to $240 billion.) Amazon is adding computing capacity as fast as it can and could grow faster if it had more, he said.

“When you’re growing 24% year-over-year with an annualized revenue run rate of $142 billion, you’re growing a lot,” he said, referring to Amazon Web Services. “What we’re continuing to see is, as fast as we install this capacity, this AI capacity, we are monetizing it...This isn’t some quixotic top line grab. We have confidence that these investments will yield strong returns on invested capital.”

Amazon’s operating margin in its non-cloud business is 7%. That compares to 3.7% at Walmart, but is lower than companies like Alibaba.

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