Amazon (AMZN) saw its stock fall Friday after analysts expressed concerns about the tech giant’s hefty spending plans on artificial intelligence (AI) and a weaker-than-expected sales forecast. The drop in shares followed comments made by CEO Andy Jassy during the company’s earnings call Thursday, where he revealed that Amazon expects to invest over $100 billion in capital expenditures this year, the majority of which will go towards expanding AI infrastructure to meet growing demand.
Despite continued optimism from analysts regarding Amazon’s long-term prospects, some lowered their price targets in response to the company’s outlook. Citi analysts, while maintaining a “buy” rating, reduced their target for Amazon’s stock from $275 to $273. They cited both the company’s forecasted sales shortfall and its ambitious spending plans as factors in their decision, although they noted that expanding Amazon’s AI infrastructure could ease “capacity constraints” that have limited faster growth in AWS (Amazon Web Services).
JPMorgan also trimmed its price target for Amazon, from $280 to $270, while reaffirming its confidence in the company’s strategy. The firm expressed comfort with Amazon’s higher spending, particularly given the company’s clear path to monetizing AI through its AWS platform. However, JPMorgan adjusted its net sales estimates for 2025 and 2026, reflecting a more cautious outlook.
The move to ramp up AI spending is in line with similar strategies from other major tech companies. Google’s parent company Alphabet (GOOGL) announced plans to invest $75 billion in capital expenditures this year to bolster its AI infrastructure. Meta (META) revealed it would allocate between $60 billion to $65 billion, while Microsoft (MSFT) has pledged $80 billion for its 2025 fiscal year to support AI initiatives.
The significant investments by these industry leaders underscore the critical importance of platforms demonstrating substantial increases in user engagement, according to Morgan Stanley analysts, who maintained their $280 price target and “overweight” rating for Amazon stock.
On Friday, Amazon’s stock fell about 4%, closing at $229.15. Despite the recent decline, the stock has experienced a nearly 30% increase over the past year.
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