Amazon layoffs: Amazon stock rises today as Amazon trims jobs again despite rising revenue — is AMZN a buy before earnings?

Amazon layoffs: Why AMZN stock is up today - Amazon.com Inc. shares edged higher on Wednesday even as the company confirmed another major round of job cuts, underscoring investor confidence in Amazon’s long-term strategy despite mounting short-term pressures. The Seattle-based tech giant said it will eliminate 16,000 roles, primarily across its corporate workforce, marking the second mass layoff in four months and bringing total announced reductions since October to roughly 30,000 jobs.

Amazon employs close to 1.5 million workers globally, including about 350,000 corporate employees. The latest cuts follow 14,000 layoffs announced in late October, part of what management describes as a structural reset after years of pandemic-era expansion. In a note to employees, Amazon’s chief people officer Beth Galetti said the company is making “organizational changes” aimed at reducing layers, increasing ownership, and cutting bureaucracy.

Despite these cuts, AMZN stock rose to $246.22, gaining 0.63% in early trading as investors pivot their focus toward the company’s upcoming Q4 earnings on February 5.


While Amazon is cutting costs in human capital, it is aggressively shifting those funds into artificial intelligence. The company’s capital expenditure reached a staggering $125 billion in 2025, with projections suggesting a climb past $150 billion in 2026. This aggressive spending has pressured free cash flow, which fell 69% to $14.8 billion.

As Amazon prepares to report a projected $211.3 billion in Q4 revenue, the market remains optimistic. Wall Street maintains a "Strong Buy" consensus, with price targets hitting $293.

Why Amazon is cutting jobs again despite rising revenue

The latest layoffs are not being framed as an emergency cost-cutting move. Instead, they reflect a longer-running effort by Chief Executive Officer Andy Jassy to streamline Amazon’s sprawling corporate structure after rapid headcount growth during the COVID-19 boom.

Amazon added tens of thousands of employees between 2020 and 2022 as online shopping, cloud demand, and logistics volumes surged. As growth normalized, management began reassessing how much internal complexity the company could sustain. Jassy has repeatedly said the goal is to “remove layers” of management and make teams smaller and faster.

On Amazon’s October earnings call, Jassy emphasized that the initial round of layoffs was not driven by artificial intelligence replacing workers, nor by immediate financial distress. Instead, it was about culture and efficiency. That message has been reinforced with this second wave, which affects teams that had not yet completed internal reorganizations last year.

Importantly, these cuts are concentrated in corporate and technology roles, not Amazon’s frontline fulfillment and delivery workforce, which remains essential to its retail and logistics operations.

How the layoffs fit into Amazon’s broader financial picture

Amazon’s third-quarter results highlighted both strength and strain inside the business. Revenue rose 13% year over year to $180.2 billion, beating expectations. Yet operating income stayed flat at $17.4 billion, weighed down by $4.3 billion in special charges.

Those charges included a $2.5 billion Federal Trade Commission settlement and $1.8 billion in severance costs linked to October’s layoffs. Excluding these items, operating income would have been $21.7 billion, pointing to solid underlying profitability.

Net income surged 38% to $21.2 billion, but that headline number was inflated by $9.5 billion in non-operating gains tied to the revaluation of Amazon’s investment in AI startup Anthropic. Analysts largely stripped that out when assessing core performance.

The more troubling signal came from cash flow. Amazon’s trailing twelve-month free cash flow fell 69% to $14.8 billion, driven by a sharp rise in capital spending. Capital expenditures jumped nearly $51 billion year over year, reflecting massive investments in data centers, chips, and infrastructure to support AI workloads.

To help fund that build-out, Amazon raised $15 billion in bonds in November, its first major U.S. dollar debt issuance in three years.

AWS growth, AI spending, and what investors want to hear next

Amazon Web Services remains the centerpiece of the company’s investment thesis. In the third quarter, AWS revenue climbed 20% year over year to $33.0 billion, its fastest pace since 2022. Operating income reached $11.4 billion, and the division reported a $200 billion backlog, signaling strong enterprise demand for AI-driven cloud services.

Advertising also continues to outperform. Amazon’s ad business grew 24% to $17.7 billion, reinforcing its role as a high-margin engine that helps offset thinner retail profits.

Still, competition is intensifying. Microsoft Azure and Google Cloud are growing faster, and investors are watching closely to see whether AWS can sustain its momentum as rivals expand capacity. Amazon’s in-house Trainium AI chips are central to that strategy, designed to lower costs and reduce dependence on Nvidia. So far, adoption has been concentrated among a small number of very large customers, including Anthropic, which is deploying hundreds of thousands of Trainium2 chips.

When Amazon reports earnings, analysts will be listening for clearer signals on how quickly AWS capacity constraints ease, how broadly Trainium is being adopted, and whether AI investments can translate into stronger cash generation.

Amazon stock performance and technical setup ahead of earnings

Amazon shares have recovered steadily from their April lows near $161, consolidating over the past four months in a tightening trading range. The stock is holding above key moving averages, with momentum indicators such as the relative strength index remaining constructive without signaling overbought conditions.

The stock has lagged the S&P 500 in 2025, gaining roughly 5%, but it is up more than 6% so far this month. According to consensus estimates compiled by LSEG, analysts expect Q4 revenue of about $211 billion and earnings of $1.97 per share, with operating margins projected to improve modestly.

Wall Street sentiment remains favorable. Out of 71 analysts covering the stock, 67 rate Amazon a buy or strong buy, with an average price target near $293, implying roughly 20% upside from current levels.

A positive earnings surprise could push shares toward last year’s highs around $258, while weaker-than-expected guidance—especially on cash flow or capital spending—could trigger a pullback toward support near $230.

What Amazon’s latest layoffs signal for 2026

Taken together, Amazon’s job cuts, heavy AI spending, and steady revenue growth point to a company in transition rather than retreat. Management is betting that leaner corporate structures and massive infrastructure investments will position Amazon for the next decade of cloud and AI-driven growth.

The "AI Job Shock" that many CEOs warned about is becoming a reality at Amazon. The company is using this period of disruption to reinvent itself. It is no longer just an "everything store" or a "cloud provider." Amazon is transforming into an AI-first infrastructure company. For the 16,000 employees leaving the company, the transition is difficult. For the company itself, this leaner, AI-focused structure is what management believes is necessary to lead the next decade of tech innovation.