Amazon shares declined 5.6% to $210.32 at the market open on Monday, extending recent losses as the market scrutinizes the company's aggressive investment in artificial intelligence infrastructure. The sell-off reflects growing investor apprehension about the timeline for returns on massive AI-related expenditures.
Cloud Deal and Financial Metrics
Amazon Web Services has entered a multi-year, multi-billion dollar semiconductor supply agreement with STMicroelectronics. As part of the arrangement, AWS received warrants to purchase up to 24.8 million STM shares, with an initial strike price of $28.38 per share. This partnership aims to secure chip supply for AWS data centers supporting cloud and AI workloads.
Investors are focusing on Amazon's financial commitments. CEO Andy Jassy has outlined plans for approximately $200 billion in capital expenditures across the company for 2026, heavily weighted toward data centers and semiconductor infrastructure. Concurrently, trailing twelve-month free cash flow has decreased to $11.2 billion, pressured by rising investments in property and equipment linked to AI expansion.
Competitive Landscape and Macro Focus
Early Monday trading showed a split performance among major cloud competitors: Microsoft shares advanced 1.8%, while Alphabet declined 2.5%. Analysts note that AWS revenue growth has recently lagged behind rivals Microsoft Azure and Google Cloud, adding to investor concerns about the competitive environment and the scale of required spending.
Market attention now turns to upcoming economic indicators. The U.S. Labor Department will release January employment figures on Wednesday, February 11, followed by the Consumer Price Index report on Friday, February 13. These data points could significantly influence interest rate expectations and, consequently, the valuation of growth-oriented stocks like Amazon.
