Amazon Stock Price Dips on Capex and Margin Concerns: Why Analysts Remain Bullish

Amazon’s shares fell nearly 9% premarket on February 6, 2026, after the company announced a 2026 capital expenditure forecast of $200 billion, far exceeding the expected $146 billion.

• The increased spending is directed toward AWS, AI, and cloud infrastructure, reflecting Amazon’s aggressive long-term growth strategy. CEO Andy Jassy noted that demand for AWS continues to outpace supply.

• Wall Street analysts remain generally bullish on Amazon, despite most cutting price targets. Many argue that the capex and margin concerns are short-term and that the long-term investment in AI and cloud services justifies the spending.

Amazon’s stock price dropped sharply following its Q4 2025 earnings report and updated capital expenditure guidance. The company reported a 5.5% decline in its stock price after the report, with GAAP earnings per share of $1.95, just below the $1.97 expected by analysts. The Q4 revenue of $213.4 billion, however, beat expectations and showed strong performance in the AWS and North American segments.

The market was particularly concerned with the $200 billion capital expenditure guidance for 2026, which represents a more than 50% year-on-year increase. UBS and Goldman Sachs both cited the guidance as a key factor in the stock’s near-term weakness, though both maintained Buy ratings.

What Explains Amazon's Stock Price Drop Amid Strong Q4 Earnings?

Despite beating revenue and AWS revenue expectations, Amazon’s stock price declined due to concerns over capital intensity and margin pressures. The company lowered its first-quarter profit guidance, signaling potential near-term challenges.

The sharp increase in capital expenditure raised red flags among investors who are concerned about the sustainability of the spending and its impact on free cash flow. Goldman Sachs highlighted that Amazon’s capex plans raise questions about how the computing capacity will be allocated—whether to internal use or external customer demand.

However, many analysts argue that the increased spending is a necessary investment in the company’s long-term growth. Bank of America's Justin Post noted that Amazon has historically delivered strong returns on capital expenditures, particularly in the cloud computing segment. Morgan Stanley's Brian Nowak and Deutsche Bank's analysts also reaffirmed their positive outlook, emphasizing the company’s strong AI and cloud computing position.

Why Are Analysts Still Bullish on Amazon Stock Price Long Term?

Despite the short-term concerns, the analyst community remains optimistic about Amazon’s long-term growth trajectory. UBS lowered its price target from $311 to $301 but maintained its Buy rating, forecasting that AWS will see growth rates double to 38% in 2026. The firm also highlighted that Amazon’s 2027 GAAP earnings per share are expected to reach around $14, which would place the stock at a 14x earnings multiple—considered a discount compared to other megacap peers.

Goldman Sachs also reiterated a Buy rating, noting that AWS remains a strong growth driver and that Amazon’s long-term positioning in e-commerce, advertising, and cloud computing is compelling. Many analysts argue that the market is underappreciating Amazon’s potential in AI and cloud services, which are expected to be key drivers of revenue and profit in the coming years.

Analysts from Citi, Deutsche Bank, and Morgan Stanley all emphasize that the capex and margin concerns are short-term headwinds and do not detract from Amazon’s strong long-term fundamentals.

What to Watch for in Amazon’s Next Moves

Investors are closely watching how Amazon will allocate its massive capex budget in 2026 and whether the spending will translate into meaningful returns in AI and cloud computing. Analysts are also tracking AWS’s ability to maintain its high growth rate amid increasing competition from Microsoft and Google Cloud.

Additionally, the market is keeping a close eye on Amazon’s earnings and guidance for the remainder of 2026. If the company can demonstrate strong returns on its capex investments and maintain its leadership in AWS, the stock could see a rebound in the months ahead. However, if the spending does not translate into clear profitability or competitive advantages, the stock could face continued pressure.

Overall, while the immediate reaction to Amazon’s earnings report was negative, the broader analyst community remains confident in the company’s long-term potential—particularly in AI and cloud computing. The challenge for investors is to balance short-term concerns with the company’s strategic vision and long-term growth opportunities.