Amazon (AMZN) Stock Rebounds Slightly After Sharp Sell-Off on Heavy AI Spending Concerns, Trades Near $205

Amazon.com Inc.’s stock has pulled back sharply in early 2026, shedding more than 10% year-to-date amid investor worries over the company’s aggressive $200 billion capital expenditure plan for artificial intelligence infrastructure, even as its core AWS cloud business accelerates growth and advertising margins expand.

As of February 24, 2026, Amazon (NASDAQ: AMZN) shares traded around $205 to $208, recovering modestly from a recent low near $203 after a nine-day losing streak that erased roughly $450 billion in market value. The decline followed the company’s February 5 earnings report, where it posted solid fourth-quarter results but guided for massive 2026 spending that exceeded Wall Street expectations.

The sell-off marked one of Amazon’s longest consecutive declines in recent history, driven by scrutiny of the $200 billion capex forecast—up nearly 60% from 2025’s $131.8 billion. Much of the investment targets data centers, custom chips like Trainium, and networking to meet surging demand for AI compute. CEO Andy Jassy defended the outlay during the earnings call, stating the company is “monetizing capacity as fast as we can install it” amid “very high demand” for AWS AI services.

Despite the pressure, Amazon delivered strong Q4 2025 performance. Net sales rose 14% to $213.4 billion, beating estimates of $211.5 billion, while adjusted earnings per share came in at $1.95, narrowly missing the $1.96 consensus. AWS revenue jumped 24% to $35.6 billion—the segment’s fastest growth in 13 quarters—with an annualized run rate nearing $142 billion. Advertising revenue continued its high-margin expansion, and North America retail sales grew 10%.

Full-year 2025 results showed revenue climbing to around $717 billion, with operating cash flow at $139.5 billion. Free cash flow compressed sharply due to heavy investments, but management emphasized long-term returns from AI-driven cloud workloads.

Amazon has ramped up AI initiatives across its ecosystem. The company highlighted advancements in custom silicon and partnerships, including expanded Trainium deployments that cut training and inference costs by up to 50%. Recent announcements include a $12 billion investment in new data center campuses in Louisiana’s Caddo and Bossier Parishes, expected to create hundreds of jobs and support AI and cloud expansion. Broader U.S. infrastructure spending reached $340 billion in 2025, bolstering Amazon’s position in AI-enabled economies.

Wall Street remains predominantly bullish despite the pullback. Consensus among analysts—ranging from 43 to 58 covering the stock—rates Amazon a Moderate Buy to Strong Buy, with average 12-month price targets between $279 and $287, implying 36% to 40% upside from current levels. Some targets reach as high as $360, reflecting optimism that AWS could sustain mid-20% or higher growth as AI demand materializes.

Analysts point to several tailwinds. AWS’s backlog of multi-year commitments from enterprises and AI firms underwrites the infrastructure buildout. Advertising growth and retail margin improvements provide diversification, while innovations like Alexa+ AI enhancements and agentic tools strengthen consumer engagement. Recent partnerships, such as Bath & Body Works launching an official storefront on Amazon, underscore the platform’s appeal for brand discovery.

Critics highlight risks from capital intensity. The $200 billion spend could pressure near-term free cash flow and returns if AI adoption slows or competition intensifies from Microsoft Azure and Google Cloud. Some observers question the sustainability of hyperscaler spending, with investor Michael Burry publicly doubting when AI data center investments might peak.

Yet many view the current weakness as a buying opportunity. Amazon trades at a forward P/E around 28-29, below historical averages for its growth profile. Proponents argue the investments position Amazon to capture outsized share in the AI cloud market, where demand shows no signs of abating. AWS added nearly 4 gigawatts of capacity in 2025 and plans to double that by 2027.

The stock’s trajectory hinges on upcoming catalysts. Amazon’s Q1 2026 earnings, expected in late April, will provide updates on capex execution, AWS utilization, and any guidance revisions. Positive traction in AI monetization could spark a rebound; signs of delayed returns might extend volatility.

Broader company moves reinforce confidence. Amazon’s rural delivery network expansion aims to double same-day delivery access, potentially adding over 100,000 jobs. Ethical AI tools and community investments highlight a balanced approach to growth.

For now, Amazon navigates a high-stakes phase in its evolution. Its dominance in e-commerce, cloud computing, and advertising remains formidable, but proving that massive AI bets will deliver commensurate returns will define whether the recent dip proves a temporary correction or a longer-term headwind.

As the AI era accelerates, Amazon’s scale, infrastructure, and innovation track record position it as a central player. Investors betting on sustained cloud and AI momentum see the current valuation as attractive, even amid the spending scrutiny.