Amazon’s share price has taken a sharp hit after the tech giant revealed plans to spend an eye-watering US$200 billion (A$285 billion) on capital expenditure in 2026, largely to scale up AI infrastructure – a move that unnerved investors despite solid cloud growth.

Shares in the company fell more than 9% in early US trading on Friday, wiping roughly US$220 billion off its market capitalisation.

The sell-off followed Amazon’s earnings update, which flagged a more than 50% jump in annual capex from nearly US$130 billion in 2025, well above expectations of about US$150 billion.

Chief executive Andy Jassy said Amazon was “investing aggressively” to become a leader in AI, pointing to strong demand for computing power across its global data centre footprint.

The spending blitz will target AI data centres, custom chips, robotics and low Earth orbit satellites, including the company’s Project Kuiper network (now Amazon Leo).

“We have confidence these investments will yield strong long-term returns,” Jassy said.

The announcement comes amid growing market jitters about Big Tech’s escalating AI arms race.

Amazon, Microsoft, Google, Meta and Oracle are collectively expected to spend more than US$700 billion on AI-related infrastructure in 2026, raising fears that spending is outpacing near-term revenue growth.

Amazon’s cloud division, Amazon Web Services (AWS), remains central to the strategy.

AWS revenue rose 24% year-on-year to US$35.6 billion in the December quarter, beating expectations but still trailing growth rates reported by rivals Microsoft Azure and Google Cloud.

Group revenue rose 14% to US$213.4 billion for the quarter, while net income came in at US$21.2 billion, broadly in line with forecasts. But Amazon warned that profits in the March quarter would be weaker than analysts had hoped.

The company is also cutting costs elsewhere. Last week it announced another 16,000 white-collar job cuts, taking total corporate layoffs to around 30,000 since October.