Amazon Shares Plummet Amid Massive AI Investment Plans

Feb 7, 2026, 2:39 AM

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Amazon's stock tumbled nearly 9% following the company's announcement of a staggering $200 billion investment in artificial intelligence (AI) and related infrastructure. This investment significantly exceeds the $125 billion Amazon spent on AI last year and reflects a broader trend among major tech firms committing to high levels of capital expenditure in the AI sector.

As part of a collective strategy, Amazon, along with other tech giants such as Meta, Google, and Microsoft, is expected to spend over $650 billion this year on AI initiatives. This surge in spending has raised alarms among investors, leading to a sell-off in shares of these companies. In the aftermath of the announcement, Amazon's shares fell by 4.4% during regular trading and continued to decline in after-hours trading.

The sharp drop in Amazon's stock price has been attributed to investor concerns over the scale and timing of the expected returns from such massive investments. Many analysts have expressed worries that the current enthusiasm for AI could lead to a bubble, reminiscent of the dot-com era. Mary Therese Barton, chief investment officer at Pictet Asset Management, noted that this rapid escalation in spending has created "jitters" in the market, prompting questions about whether these investments will yield expected benefits in the future.

Amazon's CEO, Andy Jassy, maintained a bullish outlook during a call with financial analysts, describing the AI landscape as an "unusual opportunity" and asserting that every customer interaction will eventually be transformed by AI. Despite this optimistic view, the company is also facing scrutiny regarding its capacity to deliver returns on such a significant investment. Financial analysts have noted that while Amazon Web Services (AWS) has seen a 24% growth, it is overshadowed by the enormity of the capital expenditures being proposed.

The market's reaction has been mixed, with some companies like Google and Meta seeing their shares rise following their spending forecasts, while Amazon and Microsoft suffered losses. In total, the combined market caps of these major players shrank by over $1 trillion in just a week, with Amazon alone losing approximately $300 billion.

Chuck Robbins, CEO of Cisco, cautioned that while AI will create significant winners, there will likely be "carnage along the way," indicating that not all companies will survive the intense competition and investment demands of the AI sector. Jamie Dimon, CEO of JPMorgan Chase, echoed this sentiment, suggesting that some of the investments in AI might not yield returns and could result in substantial losses for investors.

Amazon's aggressive investment strategy comes at a time when the company is also attempting to streamline operations and cut costs in other areas, such as its physical retail presence. The company has announced plans to close several of its Fresh and Go stores, reallocating resources to enhance its e-commerce operations and AI capabilities.

The scale of Amazon's planned investment in AI infrastructure not only signifies its commitment to leading the AI revolution but also highlights the shifting dynamics in the tech landscape. Analysts warn that such high levels of spending may narrow competition to only those firms capable of sustaining these long-term capital commitments.

As the AI market continues to evolve, the coming months will be critical for Amazon and its peers. Investors will be closely monitoring these companies' ability to translate their significant investments into profitable returns, as the consequences of potential over-investment could have lasting impacts on the tech industry.

With uncertainties regarding profitability and market demand, the discourse surrounding AI investments is likely to intensify, keeping Wall Street on high alert as companies navigate the fine line between innovation and financial sustainability.

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