Podcast Summary: Bloomberg Intelligence

Episode: Instant Reaction: Amazon Boosts Spending Far Ahead of Estimates

Hosts: Carol Massar & Tim Stenovec
Guests: Poonam Goyal (Senior Analyst, Bloomberg Intelligence), James Choc Mok (Partner & CIO, Clockwise Capital)
Date: February 5, 2026

Overview

This episode delivers instant, in-depth analysis of Amazon's Q4 2025 results, with a focus on the company's significantly higher-than-expected 2026 capital expenditure (CapEx) forecast. The hosts and guests discuss the market's reaction, the data behind Amazon's results, underlying business trends (especially in AWS and advertising), and where Amazon's heavy investments are heading. The conversation also compares Amazon's moves with broader trends among tech "hyperscalers" and examines implications for investors.

Key Discussion Points & Insights

1. Amazon Q4 2025 Results: Headline Numbers

Timestamps: 01:52–05:53

• EPS: $0.95/share – slightly below Street consensus
• Operating Margin: 11.7% – in line with estimates
• Net Sales: $213.39B for Q4 (beat estimate of $211.49B)
• North America Net Sales: $127.08B (just under estimate of $127.21B)
• AWS Net Sales: $35.58B (beat estimate of $34.88B)
• Advertising Growth: Up 22%
• CapEx Outlook (2026): $200B — way above Street estimate of $146.11B.
• Q1 2026 Sales Guidance: $173.5–$178.5B (Street est. $175.54B)

Notable Share Price Reaction:

• Shares fell by as much as 11% aftermarket, paring losses to -7.5% later in the show.

Carol Massar (02:36):
"Shares of Amazon, they’re lower in the aftermarket, down by about 4.4% now, 3.9%. Bouncing around a little bit, but still lower by two and a half percent."

Tim Stenovec (03:30):
"2026 capex about $200 billion — that way exceeds estimates. That estimate was for $146.11 billion. Shares moving lower in the after hours now down by about 7%–8%."

2. Why Is CapEx the Story?

Timestamps: 05:02–06:41

• The $200B CapEx plan is the central narrative—stuns investors and overshadows otherwise solid operational results.
• Major planned investments in AI, chips, robotics, and low Earth orbit satellites.
• Market reaction is negative in the very short term; concern over returns on such steep spending.

Direct quote from Amazon’s CEO Andy Jassy (via Tim Stenovec, 05:15):
"With such strong demand for our existing offerings and seminal opportunities like AI chips, robotics and low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026 and anticipate strong long term return on invested capital."

Carol Massar (05:53):
"That Capex line, just like we saw play out with Alphabet last night, a bit of a shocker…certainly we have investors not liking that number."

3. Operational Insights & Segment Highlights

Timestamps: 06:41–07:44

• Solid growth in AWS and retail.
• North America retail margins above expectations (+9%).
• International margins “okay.”
• AWS margins robust at 35%.
• Guidance assumes "no further restructurings" beyond the 16,000 corporate jobs cut in January 2026.
• Multiple innovations mentioned, e.g., AI-driven tools (Amazon Connect and AWS AI Factories).

Carol Massar (07:09):
"Amazon guidance assumes no additional restructurings...the company is cutting 16,000 corporate jobs worldwide in an effort to remove layers of bureaucracy and increase ownership."

4. Analyst Insight: Poonam Goyal (Bloomberg Intelligence)

Timestamps: 07:55–15:58

• CapEx Reaction: CapEx surprise is not a negative in the long term; reflects necessary investment to keep up with AI and cloud demand.
  • “We were looking for $140 billion. $200 billion just continues to show that they’re investing...” (Poonam Goyal, 08:07)
• Fundamental business trends: Amazon is “growing profitably,” with results “good to okay” across segments.
• Investor reaction: Likely about the magnitude and destination of CapEx; "where is the money actually going?"
  • “The call will give us a little more insight into where they are investing and that'll be important.” (09:33)
• Job Cuts / Restructuring: More automation-driven layoffs likely as AI is introduced into operations.
  • "I don't think we're over...AI is going to allow them to pare back on jobs." (11:05)
• Advertising: 22% growth is vital but may be underappreciated; advertising is a high-margin funding source fueling retail.
  • “Advertising is a segment that sometimes overlooked as we get caught up into AWS...it’s pursuit, especially when it comes to physical stores, is grocery, it’s high profit margin, higher than the cloud business.” (13:54, 15:20)
• Questions for Amazon:
  • More color needed on CapEx breakdown.
  • How is AI being integrated into consumer workflows?
  • The impact and intent of a rumored $10B investment in OpenAI.

5. Investment Manager View: James Choc Mok (Clockwise Capital)

Timestamps: 16:23–26:19

• Fund stance: No plan to add more Amazon shares now; focus is on semiconductors for new investments.
  • “See no urgency in the grossing of Amazon or any other of the mega cap names.” (16:47)
• Macro Take: Market is shifting from “growth at any cost” to a sharper focus on returns and financial discipline.
  • “Earnings, free cash flow, return on spend, all those things are important. Just a couple of quarters ago you couldn't spend enough and be rewarded for it. And now…the market's kind of getting religion again as it relates to…financial expectations.” (17:26)
• Who benefits from all this CapEx?
  • Semiconductor firms—focus is on those with "scarcity" (memory and manufacturing, e.g., Intel, Micron) versus commoditized areas (e.g., Nvidia, AMD).
  • “As far as where this CapEx spend goes, you know, I think it will be a rising tide…But who has the pricing power and the most material upside estimates? That’s where we focus.” (21:18)
• AWS AI Factories & In-House Chips: Services to accelerate customer AI deployments add to AWS stickiness. In-house accelerators and chips are “optionalities” not yet priced in by markets.
• Market Sentiment & Asset Allocation: Technical stocks, especially non-scarce assets, face multiple contractions; semiconductors, select defensives, and staples are favored.
• Crypto/BTC Perspective: Bitcoin volatility tied to leverage unwinding; not necessarily contradicting its long-term thesis.
  • “We think that this is all about leverage in the system...bitcoin crypto has more leverage than pretty much any other part of the market right now.” (24:51)

Notable Quotes & Memorable Moments

• Tim Stenovec: "The company saying that growing 24%. Our fastest growth in 13 quarters. Advertising growing 22%. Stores growing briskly across North America. International chips business growing triple digit percentages year over year. This growth is happening because we're continuing to innovate at a rapid pace and identify and knock down customer problems." (05:02)
• Poonam Goyal: "I would like to see more on their core business rather than ancillary businesses." (re: CapEx priorities) (10:36)
• James Choc Mok: "You just have to follow the money in this market...we're equal weight roughly with the index with respect to Amazon. See no urgency in the grossing of Amazon or any of the other mega cap names." (16:47)
• Carol Massar: "That Capex line, just like we saw play out with Alphabet last night, a bit of a shocker and certainly we have investors not liking that number." (05:53)

Key Segment Timestamps

• Amazon Q4 Headline Numbers: 01:52–05:53
• CapEx Discussion / Market Reaction: 03:30–05:53
• Operational Highlights: 06:41–07:44
• Analyst Perspective – Poonam Goyal: 07:55–15:58
• Investment Manager View – James Choc Mok: 16:23–26:19

Summary & Takeaways

• Massive CapEx Shock: Amazon's $200B CapEx forecast for 2026 dwarfs expectations and sets the tone for the conversation although operational metrics and topline growth remain solid.
• Mixed Investor Reaction: Immediate, negative share-price reaction reflects short-term worries about ROI and financial discipline. Analysts stress need for more clarity on spending priorities.
• Business Fundamentals Strong: AWS, retail, and advertising saw robust growth and margins, with innovation driving topline expansion.
• Broader Trend: Amazon’s spending is part of a broader hyperscaler arms race in AI/cloud infrastructure, as seen with Alphabet and other tech giants.
• Future Watchpoints: Where exactly the CapEx will be deployed, AI/automation’s effect on workforce, and evidence of high return on these blockbuster investments.