Exploring Alternatives to Amazon: 4 ETFs That Might Be a Better Investment Choice
Amazon's Stock Performance: Amazon.com Inc’s shares are struggling due to tariffs, slow growth in core areas, and rising competition, with a growth rate of just over 2% compared to the Nasdaq 100 Index's 11%+ growth in 2025.
ETFs as Investment Solutions: For investors looking to balance exposure to Amazon while reducing risks, various ETFs like the Consumer Discretionary Select Sector SPDR Fund and Vanguard Consumer Discretionary Index Fund offer diversified options that include Amazon alongside other major retailers.
Targeted Retail ETFs: More focused retail investments can be made through ETFs such as the VanEck Retail ETF and First Trust Dow Jones Internet Index Fund, which also feature Amazon prominently, allowing investors to benefit from its performance while mitigating risks.
Long-Term Outlook for Amazon: Despite recent underperformance and concerns about market share loss, Amazon remains a key player in e-commerce and cloud computing; ETFs provide a way for investors to engage with Amazon's potential while avoiding the volatility associated with investing heavily in a single stock.
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- Restructuring and Layoffs: Elon Musk announced a reorganization at xAI aimed at improving execution speed, although he did not specify the number of layoffs, which could impact operational efficiency and employee morale.
- Co-Founder Departures: The announcement of two co-founders leaving xAI, following several other founding members' exits, indicates internal turmoil that may negatively affect team dynamics and project progress.
- Acquisition Deal: Last week, SpaceX completed an all-stock acquisition of xAI, valuing the company at $250 billion post-merger, highlighting Musk's commitment to the AI sector and paving the way for a potential public offering.
- Regulatory Scrutiny: xAI is under investigation in multiple jurisdictions, including Europe, Asia, and the U.S., regarding potential violations related to its Grok chatbot, which could harm the company's reputation and market performance.
- Short-Dated Risk: Jessica Pulay, CEO of the UK's Debt Management Office, cautioned Parliament about the refinancing risks associated with expanding T-bill issuance, particularly during market turmoil, which could exacerbate public finance vulnerabilities.
- Issuance Comparison: This fiscal year, T-bills are projected to account for only £11 billion in net issuance, significantly lower than the £304 billion in long-dated gilt sales, indicating the UK's relative lag in short-term debt issuance compared to countries like the US.
- Market Reaction Impact: While T-bills typically offer lower interest rates, their frequent resale exposes them to greater market volatility; Pulay emphasized the need to consider liquidity and execution risks to ensure long-term borrowing value.
- Future Issuance Plans: The Debt Management Office will outline its issuance plans for the 2026/27 fiscal year on March 3, as demand for long-dated gilts declines, despite recent successful sales of ultra-long bonds, highlighting a need for ongoing market trend monitoring.
- Surge in Capital Expenditure: Top hyperscalers are expected to increase capital expenditures by 70% this year, with Amazon, Alphabet, Meta, and Microsoft planning a combined spending of over $600 billion, indicating a strong commitment to AI infrastructure investment.
- Mixed Market Reactions: Despite the significant increase in capital spending, Amazon and Microsoft's shares have dropped 12% and 16% respectively, while Alphabet's stock is down less than 1% and Meta's has risen by 1%, reflecting investor concerns about the timing of returns on these investments.
- Infrastructure Investment Opportunities: With spending accelerating, investors are drawn to
- Major Investment Decision: Alphabet's (GOOG, GOOGL) choice to fund its AI capital expenditures with a $100 billion century bond represents a significant bet on a technology that is only three years old, reflecting the company's confidence in future tech advancements.
- Strong Market Response: The bond offering was oversubscribed by 10 times, indicating that despite historical challenges faced by similar century bond issuers, investor confidence in large tech firms remains robust, suggesting expectations for long-term returns.
- Historical Lessons Caution: Economic strategist Hardika Singh highlighted cautionary tales from JCPenney and General Motors, which faced bankruptcy after issuing long-term debt, warning investors to carefully assess whether Alphabet can maintain its market dominance over the next century.
- Broader Market Implications: Given the significant share of large tech companies in major indices, Singh questioned whether the market could continue to push toward all-time highs if these firms fail to sustain growth, hinting at potential market risks ahead.
- Capital Expenditure Plans: The four major hyperscalers are set to invest approximately $650 billion in capital expenditures in 2026, with a significant portion allocated to AI infrastructure, reflecting strong confidence in future financial outcomes.
- Surge in Dell Demand: Dell Technologies reported all-time high orders for AI servers in its fiscal Q3 2026, with a backlog of $18.4 billion, indicating a rapid increase in market demand for its AI products.
- Google's Spending Details: Alphabet plans to allocate at least $175 billion in capital expenditures in 2026, with about 60% directed towards servers, creating a substantial tailwind for the entire server market, particularly benefiting companies like Dell indirectly.
- Investment Value Analysis: Dell's stock trades at less than 11 times its forward earnings, indicating a reasonable valuation; combined with stable business performance and high demand, it presents a low-risk investment opportunity, especially amid surging AI server demand.
- Investor Insight: Prominent investor Chamath Palihapitiya highlights that since late November 2022, Microsoft has had the worst stock performance among tech giants, indicating limited returns on its investment in OpenAI, which may lower market expectations and negatively impact stock price.
- Volatility Analysis: Volatility skew data shows that for the March 20 expiration, put options have significantly higher implied volatility than call options, indicating a heightened focus on downside risk, which could lead to increased demand for hedging against Microsoft stock.
- Trading Parameters: According to the Black-Scholes model, Microsoft stock is expected to trade within a range of $402 to $423 over the next 36 days with a 68% probability, suggesting a conservative market outlook where a strong catalyst is needed to drive significant price movement.
- Hedging Strategy: Investors might consider a 410/415 bull call spread, which could yield a maximum profit of 117% if Microsoft stock exceeds $415 at expiration, indicating potential profit opportunities despite the prevailing market risks.










