Amazon Inventory Slides Friday Amid Issues About AI Spending, Delicate Forecast

Amazon (AMZN) shares dropped Friday and a few analysts lowered their value targets amid issues concerning the tech big’s plans to ramp up spending on synthetic intelligence and softer-than-expected gross sales forecast.

CEO Andy Jassy steered through the firm’s earnings name Thursday that Amazon expects to spend over $100 billion in capital expenditures this yr, most of which is about to go towards constructing out AI infrastructure to spice up capability.

Analysts have remained largely bullish concerning the inventory’s upward trajectory, however some lowered their value targets within the wake of Thursday’s earnings name.

Citi analysts, who maintained a “purchase” score for the inventory, mentioned an growth of Amazon’s AI infrastructure might assist “alleviate capability constraints” protecting AWS from rising quicker. Nonetheless, the analysts lower their goal for the inventory to $273 from $275, noting Amazon’s weaker-than-expected gross sales forecast in addition to its spending plans.

JPMorgan analysts mentioned they’re “snug” with Amazon’s increased spending, “given AMZN’s very clear path to AI monetization via AWS.” Nonetheless, JPMorgan equally trimmed its value goal to $270 from $280, decreasing its web gross sales estimates for 2025 and 2026. 

Amazon’s plans to spice up spending on AI comply with related strikes by a number of of its Massive Tech friends. Google mum or dad Alphabet (GOOGL) earlier this week mentioned it might spend $75 billion in capital expenditures this yr to assist increase its AI capability. Final week, Meta (META) mentioned it plans to take a position $60 billion to $65 billion this yr, and Microsoft (MSFT) mentioned it plans to spend $80 billion on infrastructure in its 2025 fiscal yr.

The tons of of billions of {dollars} spent on AI by Massive Tech heavyweights this yr “places an excellent increased significance on every platform’s capacity to point out materials incremental engagement,” Morgan Stanley analysts mentioned. They maintained a $280 value goal and “obese” score for Amazon inventory.

Shares of Amazon dropped about 4% Friday to shut at $229.15, although even with Friday’s losses, they’ve gained almost a 3rd of their worth over the previous 12 months.