Amazon Shares Gain Momentum from Legal and Financial Tailwinds

Supreme Court ruling eases tariff pressure on Amazon as it surpasses Walmart in U.S. revenue. Strong Q4 results contrast with investor concerns over a $200B AI-driven CapEx plan for 2026.

A dual boost from Washington and its own financial performance provided significant support for Amazon this week. The e-commerce giant saw pressure ease from a major trade policy ruling while simultaneously achieving a key revenue milestone.

A Landmark Ruling on Tariffs

In a 6-3 decision on Friday, the U.S. Supreme Court ruled that former President Donald Trump lacked the legal authority to impose sweeping tariffs under the International Emergency Economic Powers Act (IEEPA). According to CNBC, the court noted that no previous president had ever used this statute to introduce tariffs of "this magnitude and scope."

The decision offers tangible relief for the e-commerce sector, which had been contending with elevated import costs, supply chain disruptions, and dampened consumer sentiment due to the tariffs. Shares across related industries also moved higher following the news.

Earlier this year, Amazon CEO Andy Jassy highlighted that tariffs had begun to "seep into" some product costs, leading customers to seek more affordable alternatives. He also observed increased consumer hesitation around non-essential purchases. The National Retail Federation described the court's decision as providing "much-needed certainty" for U.S. businesses and manufacturers, CNBC reported.

Shifting the Retail Revenue Crown

Adding to the positive momentum, a report from the Wall Street Journal on February 20 revealed that Amazon has now surpassed Walmart as the highest-revenue company in the United States. For the full year 2025, Amazon posted revenue of $716.9 billion, edging out Walmart's $713.2 billion, according to CNBC.

The narrow margin of victory is less notable than the underlying growth rates. Amazon's revenue expanded by 12.4% in 2025, significantly outpacing Walmart's 4.7% growth. This divergence underscores the shifting dynamics between the two retail behemoths.

Balancing Growth and Investment

Despite the encouraging developments, investor concerns persist, primarily centered on capital expenditure. Recent share price pressure, as noted by CNBC, stemmed largely from Amazon's quarterly report on February 5. The company announced a planned capital expenditure (CapEx) of $200 billion for 2026—a nearly 60% increase over the prior year. A substantial portion is earmarked for AI infrastructure, including data centers, chips, and networking technology. This aggressive investment strategy presents a classic tension: while it may fuel long-term growth, it pressures short-term cash flow.

Operationally, Amazon delivered strong fourth-quarter 2025 results. The company reported revenue of $213.39 billion and a diluted earnings per share of $1.92, according to Barchart. Its cloud division, AWS, grew 24% to $35.6 billion, while advertising revenue jumped 23% to $21.3 billion. Furthermore, the company's gross margin for the full year exceeded 50% for the first time, signaling a growing contribution from higher-margin revenue streams.

Additional confidence came from a notable investor. A regulatory filing disclosed that Bill Ackman's Pershing Square Capital Management significantly increased its stake in Amazon during the fourth quarter, CNBC reported on February 21.

Amazon's shares closed at €178.36 on Friday. Looking ahead to 2026, the company faces the challenge of balancing the growth potential of massive AI investments against the immediate financial costs of that expansion. Market watchers may glean further clues on the trade policy landscape from former President Trump's upcoming "State of the Union" address on Tuesday.