Amazon.com shares ended Friday sharply lower, falling 3.1% to $246.03, as a broad technology selloff overwhelmed positive company-specific news. The decline came despite Amazon Web Services securing a landmark $4 billion cloud contract with Pinterest, underscoring how macro concerns are currently dominating investor sentiment.
The Nasdaq Composite tumbled 4.18% on Friday and closed the week down 4.7%, snapping a nine-week winning streak for Wall Street. The selloff was triggered by a stronger-than-expected U.S. jobs report, which reignited fears that the Federal Reserve may delay interest rate cuts. The S&P 500 slid 2.64%, while the Dow Jones Industrial Average lost 1.35%.
AWS Deal Provides Some Support
Pinterest announced Thursday that it will spend $4 billion on Amazon Web Services through 2031, marking the largest cloud deal in Amazon's history. Amazon shares rose 1.5% on the news that day. Under the agreement, AWS will provide Pinterest with custom chips, including Graviton and Trainium processors, to power the social media company's artificial intelligence initiatives.
Pinterest Chief Technology Officer Matt Madrigal said the expanded partnership gives the company "compute flexibility" and "infrastructure efficiency" as it scales its AI workloads. Amazon is counting on such enterprise deals to demonstrate the long-term revenue potential of its AI investments, which have drawn intense scrutiny from investors.
AI Spending and Cash Flow Concerns
Amazon's first-quarter results painted a mixed picture. Net sales rose 17% to $181.5 billion, with AWS revenue climbing 28% to $37.6 billion. Chief Executive Andy Jassy noted that AWS growth was the fastest in 15 quarters, adding that Amazon is "well positioned to lead" in AI and cloud computing.
However, free cash flow plummeted to $1.2 billion from $25.9 billion a year earlier, driven by a surge in property and equipment spending tied to AI infrastructure. The steep drop has left investors questioning the near-term payoff of Amazon's heavy capital outlays.
Prime Day Shift and Retail Competition
Amazon announced it will hold Prime Day from June 23 to June 26 this year, moving the event back to June after five years in July. Jamil Ghani, Amazon Prime international vice president, said the date was chosen to accommodate the FIFA World Cup and the upcoming 250th anniversary of the United States.
Prime Day has evolved beyond a simple shopping event into a key test of Amazon's delivery speed, grocery capabilities, and the overall value of Prime membership. The event comes as Walmart continues to expand its Walmart+ same-day service. Adobe Digital Insights lead analyst Vivek Pandya said Adobe expects "strong year-over-year growth" in June online spending tied to Prime Day.
Regulatory Headwinds in Europe
Adding to the uncertainty, the European Union is drafting regulations that could limit Amazon, Microsoft, and Google from bidding on sensitive government cloud projects in sectors such as banking, healthcare, and energy. The draft rules still require approval from EU governments and lawmakers. Amazon declined to comment on the proposed regulations.
Market Outlook
As markets prepare for Monday's open, investors are weighing Amazon's strong cloud momentum against the broader tech selloff, rising interest rate concerns, and regulatory risks. The Nasdaq's direction will likely play a key role in determining whether Amazon is viewed as a resilient cash machine or just another big tech name caught in the downdraft.
