Amazon.com, Inc. (AMZN) shares have officially entered a bear market, closing Friday at $198.79 and extending a nine-session losing streak that has erased roughly 18% of the stock's value. The slide represents the company's worst performance in nearly two decades and marks a decline of more than 20% from a recent peak, meeting the technical definition of a bear market.
AI Spending Weighs on Investor Sentiment
The sell-off has broadened beyond a reaction to quarterly earnings into a wider debate about capital allocation. Major technology firms, including Amazon, are projected to spend approximately $650 billion collectively in the race for artificial intelligence dominance. Analysts have flagged "execution risk" associated with Amazon's own planned $200 billion AI infrastructure outlay. Daiwa Securities recently lowered its price target on the stock to $280 from $300, citing these concerns.
Regulatory and Operational Headlines
Adding to the uncertainty, Italian tax authorities conducted searches at Amazon's Milan headquarters and the residences of several managers as part of a tax-evasion investigation. The company has called the actions "aggressive and wholly disproportionate," stating it remains in dialogue with officials. On a separate operational note, the first flight of Europe's Ariane 64 rocket successfully launched, carrying 32 satellites for Amazon's Project Kuiper constellation—the beginning of 18 contracted launches.
Investor focus is shifting toward which companies can fund massive AI build-outs without severely impacting cash flow. Market strategists note the landscape is becoming a "minefield," with the market now differentiating between perceived winners and losers rather than rewarding a blanket "AI trade." The next significant catalyst for the sector is widely seen as Nvidia's (NVDA) earnings report on February 25, which will provide a checkpoint for data-center demand.
With U.S. markets closed Monday for the Washington's Birthday holiday, traders will watch for signs of stabilization when trading resumes. Amazon, alongside peers like Microsoft (MSFT), will be under particular scrutiny as it navigates this period of heightened spending scrutiny and regulatory oversight.
