Amazon loses $450 billion amid historic downturn; here's why

• Amazon's planned $200 billion capital expenditure for AI infrastructure (data centers, chips, networking equipment) is nearly 60% higher than last year and exceeds analyst expectations by over $50 billion
• The nine-day losing streak marks Amazon's worst performance since 2006, with the stock potentially tying its longest losing streak on record (10 days) set in 1997
• Wedbush analysts say Amazon is now in 'prove it mode' and will need to demonstrate tangible returns on AI spending before investor confidence returns, with the increased spending remaining an 'overhang' on the stock

Amazon Loses $450 Billion Amid Historic Downturn

Summary

Key Developments:

Amazon has lost $450 billion in market value during a historic losing streak, with the stock experiencing nine consecutive days of losses through Friday—the worst streak since 2006. If the tenth consecutive decline materializes, it would tie the company's longest losing streak on record from 1997.

AI Spending Concerns:

The sell-off stems from Amazon's fourth-quarter earnings report, where the company announced plans to spend $200 billion in capital expenditures this year—a nearly 60% increase from the previous year and over $50 billion above Wall Street expectations. The majority of spending is earmarked for AI-related infrastructure, including data centers, chips, and networking equipment.

Market Implications:

Investor anxiety centers on whether massive AI investments will generate returns or erode profit margins. Big Tech companies collectively—including Alphabet, Microsoft, Meta, and Amazon—could spend $700 billion on AI infrastructure this year. On Tuesday, Alphabet declined over 1%, while Microsoft and Meta shares also fell, reflecting broader concerns about AI spending across the sector.

Company Response:

CEO Andy Jassy defended the spending strategy, expressing confidence in "strong returns on invested capital." AWS CEO Matt Garman emphasized the capex increase would enable Amazon to capture AI opportunities in the cloud market.

Analyst Perspective:

Wedbush analysts noted Amazon is in "prove it mode," requiring the company to demonstrate tangible returns before investor confidence recovers. The firm maintains an outperform rating on the stock despite the increased spending overhang. The market awaits concrete evidence that AI investments will translate into meaningful financial returns.