Amazon spending in focus as hyperscale peers boost capex plans

Amazon (AMZN) is scheduled to report fourth quarter results after the market close on Thursday, February 5, with a conference call scheduled for 5:00 pm Eastern Time. What to watch for:

EXPECTATIONS: Current consensus EPS and revenue forecasts for Amazon’s December-end quarter stand at $1.96 and $211.23B, respectively, according to data provided by S&P Global Market Intelligence.

That $1.96 EPS estimate for the fourth quarter is up 2c over the past 90 days ago, according to S&P data.

Along with its Q3 report, Amazon said Q4 net sales are expected to be between $206B-$213B, or to grow between 10% and 13% compared with fourth quarter 2024. Operating income is expected to be between $21.0B-$26.0B, compared with $21.2B in fourth quarter 2024, the company added.

SPENDING: In its own earnings report last night, Google parent Alphabet (GOOGL) guided to 2026 capital expenditures to range from $175B-$185B to “meet customer demand and capitalize on the growing opportunities we have ahead of us,” adding that it is seeing its AI investments and infrastructure “drive revenue and growth across the board.”

After Microsoft’s (MSFT) recent earnings report, Goldman Sachs lowered the firm’s price target, stating that while Microsoft beat revenue and EPS expectations and guided Azure growth modestly above consensus, the negative stock reaction reflected another quarter of higher-than-expected capex without a step-up in Azure growth rates.

With its earnings report on January 28, Meta (META) said it expects full year 2026 total expenses to be in the range of $162B-$169B, with the majority of expense growth driven by infrastructure costs. The company anticipates 2026 capital expenditures, including principal payments on finance leases, to be in the range of $115B-$135B, with year-over-year growth driven by increased investment to support its Meta Superintelligence Labs efforts and core business.

In a note to investors on the spending among the cloud hyperscalers, Morgan Stanley analyst Brian Nowak noted that Alphabet’s 2026 capex of up to $185B would be 32% larger than the total data center spend across the six largest players only three years ago, adding that Meta’s high-end of $135B would be only about 4% lower than the industry in 2023. Meta’s and Alphabet’s results showcase how they are spending and budgeting to manage capacity constraints to deliver faster growth in their most important businesses even through heavy investment in long-term opportunities, says the analyst, who contends that Amazon “needs to do the same and deliver 23%+ AWS growth.”

ANALYSTS: On January 28, Oppenheimer analyst Jason Helfstein raised the firm’s price target on Amazon to $315 from $305 and kept an Outperform rating on the shares. The firm cites higher AWS estimates after analyzing Anthropic’s impact. Oppenheimer is now assuming FY26 AWS revenue growth of 24% versus the Street’s forecast of 21%, the analyst noted. Separately, e-commerce margins are beginning to benefit from automation investments, and Oppenheimer sees $7B of cost savings by FY27, which it see equating to a 5% uplift to consolidated EBIT.

More recently, UBS raised the firm’s price target on Amazon to $311 from $310 and kept a Buy rating on the shares ahead of the Q4 earnings report. Amazon’s valuation has been rolled forward with higher AWS revenue and capital expenditure assumptions, lifting aggregate 4Q25-4Q27 CapEx estimates to $344B as AWS plans to double capacity by 2027, the analyst tells investors in a research note. Shares are viewed as undervaluing a potential doubling of AWS revenue by 2028, which could drive roughly $20B in incremental free cash flow, alongside additional upside from e-commerce, advertising, content, and LEO investments, UBS says.

In addition, Citizens raised the firm’s price target on Amazon to $315 from $300 and kept an Outperform rating on the shares. The Information last week reported that Anthropic increased its internal revenue projections for 2026 to at least $17B, which bodes well for Amazon’s AWS given it is Anthropic’s primary compute partner, the analyst tells investors. Anthropic expects to spend about $7B on inference and more than $12B on training in 2026, and it is assumed Amazon will capture the majority of this spend, the firm adds.

SENTIMENT: Check out recent Media Buzz Sentiment on Amazon as measured by TipRanks.