Amazon Q4 2025 Earnings: A $700 Billion Year and a $200 Billion Bet on AI

Amazon just reported Q4 2025 earnings, and the headline is historic: the company crossed $700 billion in annual revenue for the first time ever. Quarterly revenue was $213.4 billion (up 14% year-over-year), and earnings per share came in at $1.95 (up from $1.86 last year). They beat on revenue but narrowly missed the $1.97 EPS analysts expected.

But the real story isn't the quarter — it's what comes next. Amazon announced plans to spend approximately $200 billion on capital expenditures in 2026, nearly double what they spent in 2025. Almost all of it is going into AI infrastructure.

The Numbers: Record Revenue, Massive Investment Plans

• Revenue: $213.4 billion (up 14% year-over-year, beat the $211.3B expected)
• Net Income: $21.2 billion (up 6% from $20B last year)
• EPS: $1.95 (slightly missed the $1.97 analysts expected)
• Operating Income: $25.0 billion (up 18% year-over-year)
• Full Year Revenue: $716.9 billion (first time over $700B)

Translation: Amazon is now bigger than Walmart by annual revenue. The slight EPS miss doesn't change the fact that this business continues to grow at a pace that shouldn't be possible for a company this size.

One thing to note: operating income included $2.4 billion in special charges — $1.1 billion for settling tax disputes in Italy, $730 million for severance costs (Amazon announced 16,000 layoffs last week), and $610 million for store-related asset write-downs. Strip those out and the underlying profitability looks even stronger.

AWS: The Fastest Growth in 13 Quarters

AWS revenue was $35.6 billion, up 24% year-over-year. That's the fastest AWS has grown in over three years.

Why the acceleration?

• AI demand is through the roof. CEO Andy Jassy said they're "monetizing capacity as fast as we can install it"
• The backlog is massive. AWS now has $244 billion in committed future revenue, up 40% from last year
• Custom chips are taking off. Amazon's Graviton and Trainium chips are now generating over $10 billion in annual revenue and growing at triple-digit percentages

Translation: AWS is now a $142 billion annualized run rate business. That's bigger than most companies' entire revenue. And unlike competitors showing flashier growth percentages on smaller bases, Amazon is adding more raw dollars of cloud revenue than anyone else.

Operating margin in AWS was 35%, generating $12.5 billion in profit this quarter alone. The cloud business remains Amazon's profit engine.

Retail: North America Strong, International Improving

North America revenue was $127.1 billion, up 10% year-over-year. Operating income jumped to $9.3 billion, up from $6.5 billion last year.

International revenue was $50.7 billion, up 17% (or 11% when you strip out currency effects). The international business has historically been a money-loser, but it's now consistently profitable.

What's driving retail growth?

• Delivery speeds keep getting faster. Amazon delivered over 8 billion items same-day or next-day to Prime members in the US — up 30% from last year
• Grocery is scaling. Over 150 million customers now use Amazon for groceries
• Advertising is booming. Ad revenue hit $21.3 billion, up 23% year-over-year

Translation: The retail business isn't just growing — it's becoming more profitable. Amazon has spent years building out regional fulfillment networks, and that investment is now paying off in both speed and cost efficiency.

What's Coming in 2026: The $200 Billion Question

Amazon gave guidance for Q1 2026:

• Revenue: $173.5 billion to $178.5 billion (11-15% growth)
• Operating Income: $16.5 billion to $21.5 billion

But the number everyone's talking about is the $200 billion in planned capital expenditure for 2026 — up from $132 billion in 2025.

Where's the money going?

• Almost all of it is for AWS. Jassy was explicit: "predominantly in AWS"
• AI infrastructure is the priority. Data centers, chips, and power capacity
• They plan to double power capacity by the end of 2027. AWS added nearly 4 gigawatts of power in 2025 — twice what they had in all of 2022

Translation: Amazon is making the biggest infrastructure bet in the company's history. They're essentially saying: AI demand is so strong that we need to spend $200 billion just to keep up. That's more than Google ($175-185B) and approaching Meta ($115-135B) combined.

The risk? If AI demand slows down or competitors catch up, Amazon will have built a lot of expensive capacity it doesn't need. The opportunity? If AI continues accelerating, Amazon will have the infrastructure to capture that demand while others are still building.

The Bottom Line for Investors

Amazon just became the largest company by annual revenue in the United States. The core retail business is growing and profitable. AWS is accelerating. Advertising continues to be a cash machine.

But this is now an AI story. The $200 billion capex plan is a statement: Amazon believes AI infrastructure will be the defining competitive advantage of the next decade, and they're willing to bet the company on it.

The question isn't whether Amazon can execute — they've proven that over 30 years. The question is whether AI demand will justify the largest infrastructure buildout in corporate history. If it does, Amazon is positioned to dominate. If it doesn't, that $200 billion becomes a very expensive lesson.

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Sources:

1. Amazon Q4 2025 Press Release - Business Wire (Official)
2. Amazon Q4 2025 Earnings Coverage - CNBC
3. AWS Q4 2025 Earnings Report - CNBC
4. Amazon Q4 2025 Earnings Call Transcript - Motley Fool