Amazon.com Inc. shares closed lower on Thursday, March 26, 2026, shedding approximately 2% to finish at $207.54 in late New York trading. The decline coincided with a significant downturn in the technology sector, which dragged the Nasdaq Composite Index down by 2.38%. This drop confirmed the index had entered correction territory, defined as a decline of 10% or more from a recent peak. The Nasdaq closed the session 10.7% below its record closing high set on October 29.
Wall Street Bullishness on Cloud Unit
Despite the day's negative price action, several prominent Wall Street firms expressed renewed optimism about Amazon's prospects earlier in the week, specifically highlighting the growth trajectory of Amazon Web Services (AWS). On Wednesday, March 25, analysts at Citi raised their price target for Amazon to $285 from $265. Similarly, JPMorgan lifted its target to $280 from $265, and Tigress Financial Partners increased its target to $315 from $305. TD Cowen also reiterated a buy rating with a $300 target.
The upgrades were primarily driven by a stronger outlook for AWS, the company's cloud computing division. Citi noted it had revised its AWS revenue estimates upward after assessing contributions from partnerships with AI firms like Anthropic and OpenAI, as well as core workloads. The firm now projects AWS revenue to grow 28% year-over-year in the first quarter and 29% for the full 2026 year. JPMorgan cited "elevated" demand for AWS services and ongoing capacity expansion as reasons for its more bullish stance.
The Central Role of AWS
The focus on AWS underscores a fundamental shift in how investors value Amazon. While the cloud unit contributes an estimated 15% to 20% of the company's total sales, it generates more than 60% of its operating profit. AWS is also the central engine for Amazon's ambitious push into artificial intelligence, making its performance critical to the company's future.
CEO Andy Jassy reinforced this narrative last week, suggesting that AWS could ultimately reach "at least double" his earlier long-term revenue projections due to transformative AI demand reshaping the cloud business. This optimism is set against a fiercely competitive backdrop, however. In the December quarter, AWS revenue grew 24%, while rivals Google Cloud and Microsoft's Azure posted growth of 48% and 39%, respectively.
The Capital Spending Conundrum
The bullish cloud forecasts are colliding with significant investor apprehension regarding Amazon's planned capital expenditures. In February, the company forecast that its 2026 capital spending would surge to approximately $200 billion, a substantial increase from the $131 billion planned for 2025. This announcement triggered an 11.5% drop in the stock following its earnings report.
Market sentiment reflects concern over the sheer scale of cash being funneled into data centers and AI infrastructure. Dave Wagner, a portfolio manager at Aptus Capital Advisors, summarized the mood at the time of the earnings release, stating, "The market just dislikes" the magnitude of the ongoing investment. The core question for investors is how long they are willing to wait for a tangible payoff from this massive outlay, which CEO Jassy has framed as a necessary, not optional, strategic move.
Geopolitical and Operational Risks
Further complicating the outlook are emerging operational and geopolitical risks. On March 24, AWS reported a service disruption in its Bahrain region caused by drone activity, marking the second cloud infrastructure incident in a month linked to conflict in the Middle East. These events highlight the vulnerability of global cloud networks to regional instability.
Additionally, a separate Reuters report on Thursday indicated that U.S. data-center power demand could more than quadruple by the end of the decade, potentially straining electrical grids and complicating expansion plans for Amazon and its peers.
Broader Market Pressures
The selloff in Amazon and other tech giants occurred within a fraught broader market environment. Commenting on Thursday's downturn, Doug Beath, a strategist at Wells Fargo Investment Institute, attributed the equity exodus to "the fog of war" stemming from geopolitical tensions. Art Hogan of B. Riley noted that the technology sector had already been weakened by "AI CapEx concerns" before the latest conflict added further downward pressure.
For Amazon, the stock finds itself caught between compelling, long-term growth narratives for its high-margin cloud business and a market increasingly impatient for evidence that its historic spending will translate into accelerated profitability. The path forward hinges on AWS's ability to monetize the AI boom sufficiently to justify its immense infrastructure investments, all while navigating a complex macro and geopolitical landscape.
