Amazon Stock Faces Nine-Day Decline Amid AI Spending Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy AMZN?
Source: Fool
- Stock Decline: Amazon's stock has dropped 14% year-to-date and has faced a nine-day losing streak, the longest since July 2006, although Wall Street believes the stock is undervalued with a median target price of $285, indicating a potential 43% upside.
- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
- Accelerating Cloud Growth: Amazon Web Services (AWS) saw a 24% revenue increase in Q4, the fastest growth in 13 quarters, with CEO Andy Jassy noting that the custom chip business has surpassed a $10 billion annual revenue run rate, indicating that AI investments are beginning to yield returns.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 199.600
Low
175.00
Averages
280.01
High
325.00
Current: 199.600
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Amazon Stock Faces Nine-Day Decline Amid AI Spending Concerns
- Stock Decline: Amazon's stock has dropped 14% year-to-date and has faced a nine-day losing streak, the longest since July 2006, although Wall Street believes the stock is undervalued with a median target price of $285, indicating a potential 43% upside.
- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
- Accelerating Cloud Growth: Amazon Web Services (AWS) saw a 24% revenue increase in Q4, the fastest growth in 13 quarters, with CEO Andy Jassy noting that the custom chip business has surpassed a $10 billion annual revenue run rate, indicating that AI investments are beginning to yield returns.
See More
Amazon's AWS Shows Strong Performance, Stock Recovery Potential
- AWS Growth Acceleration: Amazon's cloud computing platform, AWS, grew at a pace of 24% in Q4, marking the fastest growth in 13 quarters, highlighting its critical role in AI model development and enhancing Amazon's competitive position in the market.
- Valuation Pullback Justified: Despite significant revenue and earnings growth, Amazon's stock has declined by approximately 7% since 2025, with its PE ratio dropping to 26.5 times, reflecting a market reassessment of its valuation, potentially providing a reasonable buying opportunity for investors.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2026, primarily for data center construction, which may impact cash flows; however, if AI computing demand continues to grow, this investment will support future business expansion.
- Investor Confidence Recovery: Although the Motley Fool analyst team did not include Amazon in their current best stock picks, analysts believe that Amazon is poised for a stock rebound in 2026, indicating a recovery in market confidence regarding its future performance.
See More
S&P 500 Index Achieves Three Years of Strong Performance
- Market Performance Review: The S&P 500 has achieved double-digit gains for three consecutive years, reflecting the ongoing bull market that has attracted significant investment into growth stocks like AI and quantum computing, although overall market momentum has recently slowed.
- Interest Rate Policy Impact: Following the Fed's interest rate cuts that began in 2024, the recent decision to hold rates steady has heightened investor concerns over uncertainty, leading to diminished confidence in tech stocks, despite strong earnings reports from companies like Meta and Taiwan Semiconductor.
- Valuation Level Warning: The S&P 500's Shiller CAPE ratio has surpassed 39, a level only reached once before, just prior to the dot-com bubble burst, indicating that current market valuations are high and may signal potential future correction risks.
- Historical Trend Analysis: Historical data shows that the S&P 500 typically declines after reaching peak valuations, although such declines are not always long-lasting; investors should focus on a long-term strategy of holding quality stocks to navigate short-term market fluctuations.
See More
Amazon Reinvests in IonQ, But Future Looks Uncertain
- Portfolio Dynamics: As of the end of 2025, Amazon's investment portfolio totals $3.5 billion, and while its stake in quantum computing is relatively small, it reflects a strategic interest in emerging technologies that could influence its long-term positioning.
- Quantum Market Potential: Analysts from Boston Consulting Group estimate that the global opportunity for quantum computing could reach between $450 billion and $850 billion by 2040, indicating significant investor interest despite the market being in its infancy.
- Historical Investment Review: Amazon's purchase of 6,671 shares of IonQ stock worth nearly $300,000 in Q4 2025 follows a complete divestment of 854,207 shares in Q3, highlighting its focus on short-term gains and response to market fluctuations.
- Changing Competitive Landscape: With giants like Amazon and Microsoft launching their own quantum processing units, IonQ's market leadership is under threat, prompting investors to carefully assess its future profitability and sustainability of market share.
See More
Tesla's $20 Billion Investment Reshapes Transportation Market
- Surge in Capital Expenditure: Tesla plans to invest over $20 billion in capital spending by 2026, more than double last year's expenditure, highlighting its ambitious vision for the electric vehicle market, especially as competitors scale back their investments.
- Diversified Factory Investments: Among the six new factories, three are dedicated to electric vehicle production, including a lithium refinery and a low-cost lithium iron phosphate battery factory, directly supporting EV growth and strengthening Tesla's market position.
- Autonomous Driving Vision: CEO Elon Musk clearly stated in the recent earnings call that only 1% to 5% of miles driven will be by humans in the future, indicating Tesla's leadership in autonomous driving, with expectations that Cybercab production will surpass all other models combined.
- Significant Market Potential: The Cybercab is expected to cost under $30,000 and have a significantly lower cost per mile than traditional taxis; if regulatory approval is achieved, Tesla's robotaxi could present a compelling market opportunity, further solidifying its leadership in the EV sector.
See More
Billionaire Bill Ackman's Investment Strategy
- Amazon Investment Analysis: Bill Ackman's 13% stake in Amazon is driven by its strong e-commerce and cloud computing presence, with expected earnings growth of 17% annually over the next three years, making the current 28 times earnings valuation appear reasonable.
- AI-Driven Growth: Amazon's development of hundreds of generative AI applications has improved retail operational efficiency, with a 1.5 percentage point increase in operating margin in Q4 and a 24% growth in cloud services sales, highlighting the positive impact of AI investments.
- Meta Platforms Investment Outlook: Ackman's 10% investment in Meta benefits from its position as the second-largest ad tech company globally, leveraging AI to enhance ad performance, with a 6% year-over-year increase in ad prices in Q4 indicating strong advertiser demand.
- Smart Glasses Market Opportunity: Meta dominates the smart glasses market with over 70% share, and spending is forecasted to grow at 60% annually, presenting long-term growth opportunities through the integration of superintelligence systems.
See More
Amazon Stock Faces Nine-Day Decline Amid AI Spending Concerns
- Stock Decline: Amazon's stock has dropped 14% year-to-date and has faced a nine-day losing streak, the longest since July 2006, although Wall Street believes the stock is undervalued with a median target price of $285, indicating a potential 43% upside.
- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
- Accelerating Cloud Growth: Amazon Web Services (AWS) saw a 24% revenue increase in Q4, the fastest growth in 13 quarters, with CEO Andy Jassy noting that the custom chip business has surpassed a $10 billion annual revenue run rate, indicating that AI investments are beginning to yield returns.
See More
Amazon's AWS Shows Strong Performance, Stock Recovery Potential
- AWS Growth Acceleration: Amazon's cloud computing platform, AWS, grew at a pace of 24% in Q4, marking the fastest growth in 13 quarters, highlighting its critical role in AI model development and enhancing Amazon's competitive position in the market.
- Valuation Pullback Justified: Despite significant revenue and earnings growth, Amazon's stock has declined by approximately 7% since 2025, with its PE ratio dropping to 26.5 times, reflecting a market reassessment of its valuation, potentially providing a reasonable buying opportunity for investors.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2026, primarily for data center construction, which may impact cash flows; however, if AI computing demand continues to grow, this investment will support future business expansion.
- Investor Confidence Recovery: Although the Motley Fool analyst team did not include Amazon in their current best stock picks, analysts believe that Amazon is poised for a stock rebound in 2026, indicating a recovery in market confidence regarding its future performance.
See More
S&P 500 Index Achieves Three Years of Strong Performance
- Market Performance Review: The S&P 500 has achieved double-digit gains for three consecutive years, reflecting the ongoing bull market that has attracted significant investment into growth stocks like AI and quantum computing, although overall market momentum has recently slowed.
- Interest Rate Policy Impact: Following the Fed's interest rate cuts that began in 2024, the recent decision to hold rates steady has heightened investor concerns over uncertainty, leading to diminished confidence in tech stocks, despite strong earnings reports from companies like Meta and Taiwan Semiconductor.
- Valuation Level Warning: The S&P 500's Shiller CAPE ratio has surpassed 39, a level only reached once before, just prior to the dot-com bubble burst, indicating that current market valuations are high and may signal potential future correction risks.
- Historical Trend Analysis: Historical data shows that the S&P 500 typically declines after reaching peak valuations, although such declines are not always long-lasting; investors should focus on a long-term strategy of holding quality stocks to navigate short-term market fluctuations.
See More
Amazon Reinvests in IonQ, But Future Looks Uncertain
- Portfolio Dynamics: As of the end of 2025, Amazon's investment portfolio totals $3.5 billion, and while its stake in quantum computing is relatively small, it reflects a strategic interest in emerging technologies that could influence its long-term positioning.
- Quantum Market Potential: Analysts from Boston Consulting Group estimate that the global opportunity for quantum computing could reach between $450 billion and $850 billion by 2040, indicating significant investor interest despite the market being in its infancy.
- Historical Investment Review: Amazon's purchase of 6,671 shares of IonQ stock worth nearly $300,000 in Q4 2025 follows a complete divestment of 854,207 shares in Q3, highlighting its focus on short-term gains and response to market fluctuations.
- Changing Competitive Landscape: With giants like Amazon and Microsoft launching their own quantum processing units, IonQ's market leadership is under threat, prompting investors to carefully assess its future profitability and sustainability of market share.
See More
Tesla's $20 Billion Investment Reshapes Transportation Market
- Surge in Capital Expenditure: Tesla plans to invest over $20 billion in capital spending by 2026, more than double last year's expenditure, highlighting its ambitious vision for the electric vehicle market, especially as competitors scale back their investments.
- Diversified Factory Investments: Among the six new factories, three are dedicated to electric vehicle production, including a lithium refinery and a low-cost lithium iron phosphate battery factory, directly supporting EV growth and strengthening Tesla's market position.
- Autonomous Driving Vision: CEO Elon Musk clearly stated in the recent earnings call that only 1% to 5% of miles driven will be by humans in the future, indicating Tesla's leadership in autonomous driving, with expectations that Cybercab production will surpass all other models combined.
- Significant Market Potential: The Cybercab is expected to cost under $30,000 and have a significantly lower cost per mile than traditional taxis; if regulatory approval is achieved, Tesla's robotaxi could present a compelling market opportunity, further solidifying its leadership in the EV sector.
See More
Billionaire Bill Ackman's Investment Strategy
- Amazon Investment Analysis: Bill Ackman's 13% stake in Amazon is driven by its strong e-commerce and cloud computing presence, with expected earnings growth of 17% annually over the next three years, making the current 28 times earnings valuation appear reasonable.
- AI-Driven Growth: Amazon's development of hundreds of generative AI applications has improved retail operational efficiency, with a 1.5 percentage point increase in operating margin in Q4 and a 24% growth in cloud services sales, highlighting the positive impact of AI investments.
- Meta Platforms Investment Outlook: Ackman's 10% investment in Meta benefits from its position as the second-largest ad tech company globally, leveraging AI to enhance ad performance, with a 6% year-over-year increase in ad prices in Q4 indicating strong advertiser demand.
- Smart Glasses Market Opportunity: Meta dominates the smart glasses market with over 70% share, and spending is forecasted to grow at 60% annually, presenting long-term growth opportunities through the integration of superintelligence systems.
See More
