Amazon’s stock (AMZN) fell significantly on February 5, 2026 following the release of its Q4 2025 earnings report after market close. The shares dropped from around $238 to $197 dropping as much as 17%. It has since steadily moved up to $206.
The main reasons for the decline:
Slight miss on earnings per share (EPS): Amazon reported adjusted EPS of $1.95, which came in just below expectations of around $1.97. While revenue beat estimates ($213.4 billion vs. $211-211.5 billion expected).
Massive capital expenditures (capex) guidance for 2026: The company announced plans to invest approximately $200 billion in capex this year, heavily focused on AI infrastructure, data centers, chips, robotics, low-Earth orbit satellites, and related areas. This was dramatically higher than expectations of around $146-150 billion and well above the roughly $130 billion spent in 2025. Investors reacted with concern over the huge spending commitment, potential pressure on near-term profitability and free cash flow, and uncertainty about the returns on such aggressive AI bets.
This capex surge overshadowed positives like strong AWS (cloud) growth, which accelerated to 24% year-over-year (its fastest in 13 quarters).
Overall, the market viewed the results as mixed: solid top-line performance and cloud momentum, but the combination of a minor EPS miss and the outsized spending plans spooked investors, leading to the sharp sell-off in extended trading. This aligns with similar reactions to high capex guidance from other Big Tech peers recently.
This pullback has brought AMZN back to levels last seen around November 2024. At current depressed levels post-earnings (22% from highs), the valuation looks more compelling for a high-quality compounder like Amazon, especially with AWS momentum, e-commerce resilience, advertising growth, and AI tailwinds positioning it well for multi-year upside.
Short strangle construction on AMZN
You’re essentially saying: the selloff was an overreaction to capex fears, downside is limited from here, but the rebound may also be capped near-term given the overhang. That’s a textbook strangle setup.
On the put side, you want to pick a level where you’d genuinely be comfortable owning AMZN.
On the call side, the question is where the rebound stalls.