Amazon Shares Plunge 11% Amid Surge in Capital Expenditures
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy AMZN?
Source: Yahoo Finance
- Surge in Capital Expenditures: Amazon projects a more than 50% increase in capital expenditures this year, planning to invest $200 billion in AI infrastructure by 2026, raising investor concerns about potential returns on such massive investments.
- Slowing AWS Revenue Growth: Amazon Web Services (AWS) reported revenue growth to $35.6 billion in the December quarter, a 24% increase, but the growth rate lagged behind competitors like Google and was overshadowed by the surge in capital spending.
- Intensifying Market Competition: CEO Andy Jassy noted that smaller competitors find it easier to achieve stellar growth rates, indicating pressure on Amazon in a competitive landscape, especially as AWS accounts for over 60% of the company's operating profits.
- Industry Investment Trends: The top four 'hyperscalers'—Amazon, Microsoft, Google, and Meta—are expected to collectively spend over $630 billion this year, reflecting Big Tech's ongoing commitment to AI investments, even as Wall Street demands signs of returns on these expenditures.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AMZN is 294.69 USD with a low forecast of 250.00 USD and a high forecast of 340.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
47 Analyst Rating
46 Buy
1 Hold
0 Sell
Strong Buy
Current: 232.990
Low
250.00
Averages
294.69
High
340.00
Current: 232.990
Low
250.00
Averages
294.69
High
340.00
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.
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- Inventory Pressure: Amazon's inventory is depleting due to tariffs imposed by Trump, leading to higher acquisition costs for merchants, which may drive up prices in the marketplace and affect consumer purchasing decisions.
- Changing Consumer Behavior: CEO Andy Jassy noted that consumers are becoming more price-conscious, seeking bargains, which could lead them to shop at alternative retailers, potentially impacting Amazon's market share.
- Long-term Growth Prospects: Despite the challenges posed by tariffs, Amazon still possesses strong long-term growth potential, with a robust business model and solid cash flow that position it well to navigate economic slowdowns.
- Reasonable Market Valuation: With a market cap of $2.6 trillion, Amazon may seem expensive, but its forward P/E ratio of 29 indicates that the stock is not egregiously overvalued, making it a solid long-term investment choice.
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- Investor Focus: Despite the overall market weakness, certain individual stocks may still attract investor attention, indicating a focus on potential opportunities and risks associated with specific companies.
- Expected Volatility: As market uncertainty increases, investors may adjust their portfolios in response to upcoming economic data and corporate earnings reports, further impacting stock market trends.
- Information Source: Market news and data provided by Benzinga offer real-time updates for investors, assisting them in making more informed investment decisions, although no specific investment advice is provided.
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- Cautious Capital Expenditure: Apple plans to increase capital expenditures by only 2.3% to $13 billion, a drop in the ocean compared to the combined forecast of over $620 billion from Amazon, Microsoft, Alphabet, and Meta, indicating a prudent approach that may support its future financial stability.
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- Surge in Capital Expenditures: Amazon projects a more than 50% increase in capital expenditures this year, planning to invest $200 billion in AI infrastructure by 2026, raising investor concerns about potential returns on such massive investments.
- Slowing AWS Revenue Growth: Amazon Web Services (AWS) reported revenue growth to $35.6 billion in the December quarter, a 24% increase, but the growth rate lagged behind competitors like Google and was overshadowed by the surge in capital spending.
- Intensifying Market Competition: CEO Andy Jassy noted that smaller competitors find it easier to achieve stellar growth rates, indicating pressure on Amazon in a competitive landscape, especially as AWS accounts for over 60% of the company's operating profits.
- Industry Investment Trends: The top four 'hyperscalers'—Amazon, Microsoft, Google, and Meta—are expected to collectively spend over $630 billion this year, reflecting Big Tech's ongoing commitment to AI investments, even as Wall Street demands signs of returns on these expenditures.
See More
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- Market Sentiment Deteriorates: Nasdaq, S&P 500, and Dow futures all slid, with Nasdaq 100 futures down about 1.2%, S&P 500 futures lower by roughly 0.7%, and Dow futures slipping around 0.4%, indicating extreme bearish sentiment that resulted in a $700 billion market cap wipeout for the S&P 500.
- Surge in Trading Activity: February trading volume surged 30% to 35% above January levels, reaching approximately 1.5 billion shares, indicating increased market participation; however, the volume of shares traded in declining stocks was twice that of rising ones, reflecting investor fear.
- Rising Uncertainty: Despite the selloff, trader Peter Tuchman noted that the reasons behind the decline in U.S. equities remain unclear, potentially linked to geopolitical tensions, earnings pressures, and AI-related uncertainties, as the market faces a “quandary.”
- Weak Economic Data: U.S. labor market data revealed job openings fell to their lowest level since 2020, jobless claims rose more than expected, and layoffs reached the highest number for any January since 2009, further exacerbating the market's pessimistic outlook.
See More
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- Inventory Pressure: Amazon's inventory is depleting due to tariffs imposed by Trump, leading to higher acquisition costs for merchants, which may drive up prices in the marketplace and affect consumer purchasing decisions.
- Changing Consumer Behavior: CEO Andy Jassy noted that consumers are becoming more price-conscious, seeking bargains, which could lead them to shop at alternative retailers, potentially impacting Amazon's market share.
- Long-term Growth Prospects: Despite the challenges posed by tariffs, Amazon still possesses strong long-term growth potential, with a robust business model and solid cash flow that position it well to navigate economic slowdowns.
- Reasonable Market Valuation: With a market cap of $2.6 trillion, Amazon may seem expensive, but its forward P/E ratio of 29 indicates that the stock is not egregiously overvalued, making it a solid long-term investment choice.
See More
U.S. Stock Futures Lower, Investors Eye Individual Stocks
- Market Dynamics: U.S. stock futures are trading lower this morning on Friday, reflecting cautious investor sentiment that may influence trading strategies and investment decisions today.
- Investor Focus: Despite the overall market weakness, certain individual stocks may still attract investor attention, indicating a focus on potential opportunities and risks associated with specific companies.
- Expected Volatility: As market uncertainty increases, investors may adjust their portfolios in response to upcoming economic data and corporate earnings reports, further impacting stock market trends.
- Information Source: Market news and data provided by Benzinga offer real-time updates for investors, assisting them in making more informed investment decisions, although no specific investment advice is provided.
See More
Apple Shares Rise 6.4%, Outperforming Peers Amid Tech Selloff
- Strong Sales Boost: Apple reported a 23% year-over-year increase in iPhone sales last week, driven by robust demand for the iPhone 17 lineup, with projected sales growth of 13% to 16% in the March quarter, surpassing Wall Street's 10% expectation, thereby enhancing investor confidence.
- Cautious Capital Expenditure: Apple plans to increase capital expenditures by only 2.3% to $13 billion, a drop in the ocean compared to the combined forecast of over $620 billion from Amazon, Microsoft, Alphabet, and Meta, indicating a prudent approach that may support its future financial stability.
- Market Sentiment Shift: While retail investors and analysts remain optimistic about Apple's prospects, recent market selloffs have led to a shift in retail sentiment, reflecting concerns over the high price-to-earnings ratio (32.1) and low growth, which could impact short-term stock performance.
- AI Collaboration Outlook: Apple's partnership with Google to power upcoming AI features is expected to debut at the Worldwide Developers Conference in June, and combined with strong iPhone 17 demand and a recovery in the Chinese market, it further elevates market optimism for Apple.
See More
US Stocks Plunge as Tech Sector Leads Decline
- Tech Sector Decline: Qualcomm's (QCOM) forecast of weaker-than-expected Q2 revenue led to an over 8% drop in its stock, triggering a sell-off across the tech sector, with the Nasdaq 100 index hitting a 2.5-month low, indicating waning investor confidence in technology stocks.
- Weak Labor Market Signals: Challenger's report revealed a staggering 117.8% year-over-year increase in job cuts for January, totaling 108,435, the highest for January since 2009, while initial jobless claims rose by 22,000 to 231,000, highlighting vulnerabilities in the US labor market that could hinder economic recovery.
- Bitcoin Plunge: Bitcoin (^BTCUSD) plummeted over 12% to a 1.25-year low, reflecting deepening negative momentum in the cryptocurrency market, with approximately $2 billion flowing out of Bitcoin ETFs in the past month, signaling a decline in investor confidence.
- Earnings Season Impact: Despite 150 S&P 500 companies set to report earnings this week, market focus on economic data intensifies, with S&P 500 earnings expected to grow by 8.4% in Q4, yet overall market sentiment remains suppressed by recent economic weakness.
See More
Amazon Shares Plunge 11% Amid Surge in Capital Expenditures
- Surge in Capital Expenditures: Amazon projects a more than 50% increase in capital expenditures this year, planning to invest $200 billion in AI infrastructure by 2026, raising investor concerns about potential returns on such massive investments.
- Slowing AWS Revenue Growth: Amazon Web Services (AWS) reported revenue growth to $35.6 billion in the December quarter, a 24% increase, but the growth rate lagged behind competitors like Google and was overshadowed by the surge in capital spending.
- Intensifying Market Competition: CEO Andy Jassy noted that smaller competitors find it easier to achieve stellar growth rates, indicating pressure on Amazon in a competitive landscape, especially as AWS accounts for over 60% of the company's operating profits.
- Industry Investment Trends: The top four 'hyperscalers'—Amazon, Microsoft, Google, and Meta—are expected to collectively spend over $630 billion this year, reflecting Big Tech's ongoing commitment to AI investments, even as Wall Street demands signs of returns on these expenditures.
See More
US Markets Experience Significant Selloff
- Market Sentiment Deteriorates: Nasdaq, S&P 500, and Dow futures all slid, with Nasdaq 100 futures down about 1.2%, S&P 500 futures lower by roughly 0.7%, and Dow futures slipping around 0.4%, indicating extreme bearish sentiment that resulted in a $700 billion market cap wipeout for the S&P 500.
- Surge in Trading Activity: February trading volume surged 30% to 35% above January levels, reaching approximately 1.5 billion shares, indicating increased market participation; however, the volume of shares traded in declining stocks was twice that of rising ones, reflecting investor fear.
- Rising Uncertainty: Despite the selloff, trader Peter Tuchman noted that the reasons behind the decline in U.S. equities remain unclear, potentially linked to geopolitical tensions, earnings pressures, and AI-related uncertainties, as the market faces a “quandary.”
- Weak Economic Data: U.S. labor market data revealed job openings fell to their lowest level since 2020, jobless claims rose more than expected, and layoffs reached the highest number for any January since 2009, further exacerbating the market's pessimistic outlook.
See More
