Amazon’s stock (AMZN) has fallen 5.1% this week amid a broader market pullback from large-cap growth stocks, bringing its year-to-date decline to roughly 11%. The drop occurs despite Wall Street analysts raising price targets, pointing to accelerating growth atAmazon Web Services driven by AI demand. The central concern for investors is whether the company’s massive $200 billion capital expenditure commitment for 2026, aimed at AI infrastructure, will yield returns quickly enough. Upcoming Q1 results on April 29 are now viewed as a critical test for the company’s earnings trajectory.
Amazon stock declined as investors retreated from large-cap growth names, with the Dow entering correction and the Nasdaq hitting a seven-month low. The departure of AI chip product leader Gadi Hutt added company-specific pressure regarding AWS‘s execution.
The scale of spending is a key focus, with capital expenditure rising from $83 billion in 2024 to a targeted $200 billion for 2026. On the Q4 earnings call, CEO Andy Jassy addressed skepticism directly, stating “This isn’t some sort of quixotic, top-line grab. We have confidence that these investments will yield strong returns on invested capital.”
AWS revenue grew 24% year-over-year to $35.6 billion in Q4 2025, its fastest growth in 13 quarters. Jassy noted during the call, “Customers really want AWS for core and AI workloads.”
Analysts’ average price target for Amazon sits at $281, implying significant upside from the current ~$201 share price. Free cash flow for 2025 fell 70% year-over-year to $11.2 billion as property and equipment spending jumped $50.7 billion.
The underlying 2025 business was strong, with $716.9 billion in net sales and $80 billion in operating income. Advertising revenue also rose 23% to $21.3 billion in Q4, providing a high-margin offset to the substantial AI investments.
