Amazon.com Shares Decline Once More, Experiencing Their Worst Streak Since 2022.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
0mins
Should l Buy AMZN?
Source: Barron's
- Stock Performance: Amazon.com is experiencing a significant decline in its stock, on track for its worst seven-day performance in over three years.
- February Challenges: The company has faced a rough month, indicating ongoing struggles in the technology and retail sectors.
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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: 204.080
Low
250.00
Averages
294.69
High
340.00
Current: 204.080
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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- Significant Capex Increase: Amazon plans to ramp up its capital expenditures from $132 billion in 2025 to $200 billion in 2026, primarily for AI data centers and robotics, a strategic investment that will bolster its competitive edge in cloud computing and automation.
- Strong E-commerce Performance: North American sales rose 10% year-over-year to $127.1 billion, while international sales increased 17% to $50.7 billion, with advertising revenue also climbing 22% to $21.3 billion, showcasing Amazon's robust operational leverage in e-commerce.
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- Increased Capital Expenditure: Amazon plans to raise its capital expenditure to $200 billion by 2026 to capitalize on significant opportunities in cloud computing and artificial intelligence, with CEO Andy Jassy emphasizing that building the necessary infrastructure is crucial to seizing these opportunities.
- Accelerated Cloud Growth: Amazon Web Services (AWS) experienced a 24% year-over-year sales growth in the fourth quarter, with a 60% sequential increase in customers using its AI builder, Bedrock, indicating strong market demand for its cloud services.
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See More
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- AWS Revenue Acceleration: Amazon's AWS segment saw a 24% revenue increase in Q4, reaching $35.58 billion, surpassing the market expectation of $34.93 billion, indicating strong demand for AI infrastructure that is expected to further enhance profitability.
- Significant Capex Increase: Amazon plans to ramp up its capital expenditures from $132 billion in 2025 to $200 billion in 2026, primarily for AI data centers and robotics, a strategic investment that will bolster its competitive edge in cloud computing and automation.
- Strong E-commerce Performance: North American sales rose 10% year-over-year to $127.1 billion, while international sales increased 17% to $50.7 billion, with advertising revenue also climbing 22% to $21.3 billion, showcasing Amazon's robust operational leverage in e-commerce.
- Optimistic Future Outlook: Amazon forecasts Q1 revenue between $173.5 billion and $178.5 billion, reflecting an 11% to 15% growth, and despite the stock dip due to capex plans, analysts view this as a great buying opportunity for long-term investors.
See More
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- Service Expansion: Amazon Pharmacy plans to expand its same-day prescription delivery service to 4,500 cities and towns across the U.S. by the end of 2026, adding nearly 2,000 new communities, significantly enhancing the coverage and convenience of medication delivery.
- New Market Penetration: This expansion will include newly served states such as Idaho and Massachusetts, aiming to provide fast and reliable medication delivery to more customers, addressing the needs of patients in diverse regions.
- Enhanced Patient Experience: John Love, Vice President of Amazon Pharmacy, stated that by combining pharmacy expertise with logistics networks, they aim to remove critical barriers for patients in accessing medications, thereby accelerating the start of treatment and improving overall medication experiences.
- Standard for Digital Pharmacy: Through this expansion, Amazon Pharmacy sets a new standard, emphasizing that patients should not have to choose between speed, cost, and convenience, thereby promoting the widespread adoption of digital pharmacy services.
See More
AWS Chief Claims AI Panic is Overblown Amid SaaS Apocalypse
- Cloud Growth Exceeds Expectations: Amazon Web Services reported a 24% revenue increase in Q4, reaching $35.6 billion, surpassing analyst expectations and demonstrating strong performance in the cloud infrastructure market despite pressures on overall software stocks.
- Market Panic Overreaction: AWS Chief Matt Garman stated that investor fears regarding AI models potentially slowing software company growth are overblown, emphasizing that core business metrics have not deteriorated, reflecting an excessive market reaction to technology stocks.
- AI-Driven Industry Transformation: Garman noted that AI will change how software is consumed and built, and while large SaaS providers face challenges, they still have an advantage in innovation and must continuously evolve to avoid disruption.
- Sustained Customer Demand: AWS anticipates that customers will require more compute technology and infrastructure than ever before, whether self-built, AI-based, or purchased from SaaS vendors, indicating ongoing demand for cloud services and market potential.
See More
AI Investment Sparks Market Turbulence
- Market Concerns Intensify: Amazon's announcement of a $200 billion investment in AI-related capital expenditures by 2026 has led to a 9% decline in its stock year-to-date, reflecting investor worries about excessive AI spending potentially impacting future profitability.
- Microsoft's Earnings Reaction: Despite reporting a 17% year-over-year revenue increase and a 21% rise in operating income, Microsoft's stock fell 17% due to concerns over its plan to spend over $100 billion on capex this year, indicating market skepticism about its AI investments.
- SaaS Sector Struggles: Software companies like Salesforce and Adobe have seen significant stock price declines as investors fear that advancements in AI will severely disrupt the enterprise software industry, leading to a phenomenon dubbed the
See More
Amazon's AI and Cloud Investment Opportunities Amid Market Volatility
- Market Performance Decline: Despite becoming the largest company in the world by sales over the past 12 months, Amazon's stock has dropped 8% in the past year, reflecting market concerns about its future performance, prompting investors to carefully assess the timing of potential purchases.
- Increased Capital Expenditure: Amazon plans to raise its capital expenditure to $200 billion by 2026 to capitalize on significant opportunities in cloud computing and artificial intelligence, with CEO Andy Jassy emphasizing that building the necessary infrastructure is crucial to seizing these opportunities.
- Accelerated Cloud Growth: Amazon Web Services (AWS) experienced a 24% year-over-year sales growth in the fourth quarter, with a 60% sequential increase in customers using its AI builder, Bedrock, indicating strong market demand for its cloud services.
- Cash Flow Changes: Although Amazon's price-to-earnings ratio is near a multi-decade low of 29, its free cash flow has decreased to $11.2 billion year-over-year, primarily due to spending on AI investments, making the current stock price decline somewhat justifiable, with patient investors likely to see returns in the future.
See More
AI Stocks Decline Amid Spending Concerns
- Investor Concerns: Major AI and software stocks have declined year-to-date due to worries about AI spending and industry disruption, with Amazon and Microsoft seeing stock drops of approximately 9% and 17%, respectively, reflecting market skepticism about their planned capital expenditures of $200 billion and $100 billion.
- SaaS Industry Crisis: As AI technology advances, investors are increasingly anxious about the future of software-as-a-service (SaaS) companies, with some labeling the situation as the 'SaaSpocalypse,' leading to significant declines in stocks like Salesforce and Adobe, indicating concerns over traditional software profitability.
- ETF Investment Opportunity: Investors can consider buying the iShares Expanded Tech-Software ETF to capitalize on a potential rebound in software company share prices, which includes 114 North American software firms and has delivered an average annual return of 10.4%, despite a P/E ratio of 35.2, slightly above the Nasdaq-100's 32.4.
- Uncertain Industry Outlook: Despite industry insiders like Nvidia CEO Jensen Huang opposing the 'SaaSpocalypse' narrative, asserting that AI will not fully replace software, the ongoing sell-off in software stocks continues, prompting investors to carefully evaluate future investment opportunities.
See More
