Shares of Amazon dropped sharply despite the company reporting a record quarterly revenue, as investors reassess the implications of its substantial spending plan for artificial intelligence (AI). Following a nine-day losing streak, Amazon’s stock has decreased more than 18%, entering a technical bear market as of February 2026. The main concern revolves around a significant capital expenditure program aimed at bolstering AI infrastructure, semiconductor development, and robotics.
In its fourth-quarter earnings report for 2025, Amazon posted a revenue of $213.4 billion, surpassing market expectations. However, the announcement of a projected $200 billion investment in AI initiatives for 2026 has raised alarm among investors. This funding is intended for infrastructure enhancements, specialized chip production, and advancements in robotics, leading to heightened skepticism about the profitability of such ambitious projects and the potential strain on cash reserves.
While Amazon Web Services (AWS) continues to show growth, reporting an annualized revenue run rate of $142 billion, investor concerns about cost pressures remain prevalent. These worries stem from the aggressive AI investment strategy, which some analysts believe could adversely impact the company’s financial health.
As Amazon trades around $198.79, it reflects broader anxiety within the technology sector, particularly among companies associated with the so-called Magnificent Seven. The ramifications of substantial AI investments have prompted scrutiny of earnings potential, mirroring similar challenges faced by Microsoft at the end of January.
The volatility surrounding Amazon’s stock is significant, particularly for the triple-leveraged ETF linked to the company, which amplifies daily price fluctuations. This heightened volatility underscores the importance of active management for investors navigating the current market landscape.
Looking ahead, key economic indicators such as the upcoming U.S. inflation data (CPI) will likely influence investor sentiment and the valuation of tech growth stocks, including Amazon. The critical technical support level for Amazon shares appears to lie between $198 and $199; maintaining this range could indicate the potential for a market bottom, contingent on clearer communication from management regarding the timing for AI monetization. Without additional clarity on the company’s AI roadmap, investor confidence may remain fragile.
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