Amazon reports fourth-quarter earnings Thursday, capping a tech earnings season dominated by a single question: whether the industry’s AI spending binge will ultimately be worth it.
The company has allocated about $125 billion for capital expenditures in 2025, much of it to build out its AI and data center infrastructure, while cutting about 30,000 corporate jobs since October in what CEO Andy Jassy has described as a campaign against bureaucracy.
Key numbers: Wall Street expects $211-212 billion in fourth-quarter revenue (near the top of Amazon’s guidance range) with operating income of roughly $25 billion and earnings per share around $1.96, about 5% from the same quarter a year ago.
Cloud growth: Investors will be listening for 2026 capital spending plans, and looking at the pace of growth in Amazon Web Services to get a sense for whether that spending is paying off. In the third quarter, AWS revenue grew about 20% year-over-year to $33 billion, its fastest pace since late 2022.
“We expect 2026 to be a big year for AWS,” Wedbush analyst Scott Devitt wrote in a recent note, adding that the firm sees “opportunity for further upside to operating income expectations.”
But underscoring the uncertain outlook for long-term cloud and AI demand, William Blair analyst Dylan Carden estimated that AWS could grow anywhere from 21% to 36% annually through 2027 — which he jokingly called “a perfectly narrow range” for financial modeling.
Retail outlook: It might be easy to forget in the AI frenzy, but unlike most other tech companies, Amazon is also a major retailer and e-commerce platform, and the fourth quarter, of course, is peak season.
Wedbush analysts expect Amazon’s online stores revenue to reach $82.5 billion in the fourth quarter, an increase of 9.3% from the same quarter a year ago. That would be slightly ahead of the broader consensus estimate for the segment of $82.1 billion.
The firm’s consumer survey found that 46% of U.S. consumers planned to increase their online spending in the fourth quarter, with 62% intending to spend more on Amazon specifically over the next 12 months, well ahead of rivals Walmart (53%) and Target (23%).
Logistics and grocery: Amazon said this week that it delivered more than 13 billion items the same or next day globally in 2025, a new record for the third consecutive year.
As a counterpoint to the recent closure of its Amazon Fresh and Go stores, the company has been expanding same-day delivery of perishable groceries to more than 2,300 cities.
And returning to the topic of AI, the company’s shopping assistant Rufus has been used by 250 million customers, with shoppers 60% more likely to complete a purchase when they use it.
But the retail landscape is more competitive than it has been in years, with Walmart, Temu, and Shein all pressuring Amazon’s margins and forcing the company to lean harder on delivery speed and Prime loyalty to defend its position.
Check back Thursday afternoon for coverage.
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