Amazon.com, Inc. (NASDAQ:AMZN) shares opened lower on Monday, falling 0.4% in early trading, as the company's second-quarter revenue forecast failed to meet analyst expectations, even as the broader technology sector rallied. The Invesco QQQ Trust (NASDAQ:QQQ), which tracks the Nasdaq-100, gained 1.3% at the open, while the Nasdaq Composite rose 0.65% as markets reopened after the July 4 holiday.
Amazon's stock slipped 1.8% from its intraday high of $246.19, wiping out approximately $49 billion in market capitalization. The stock's underperformance relative to the QQQ was notable, lagging by roughly 1.76 percentage points. At the latest quote, Amazon traded at $241.67, while the QQQ was at $722.21 and the SPDR S&P 500 ETF (NYSEARCA:SPY) rose 0.6% to $748.95.
The weakness comes as some on Wall Street see the artificial intelligence trade rotating from chip stocks to so-called "hyperscalers" like Amazon. Morgan Stanley said Monday it expects investors to shift capital out of semiconductor names and into AI hyperscalers as spending increasingly flows into data centers. The bank highlighted both Amazon and Alphabet Inc. (NASDAQ:GOOGL) as beneficiaries, noting that these companies could also keep near-term capital expenditures in check.
Despite the day's decline, analysts remain bullish on Amazon's long-term prospects. The average 12-month price target among 40 analysts tracked by Benzinga stands at $315.78, implying roughly 31% upside from current levels. The analyst range spans from $260 to $370. Wells Fargo maintained its $313 target on July 2. If Amazon shares reach the average target, the company would add about $807 billion in market value based on current shares outstanding.
Amazon is set to report second-quarter earnings on July 30. The consensus estimate calls for earnings per share of $1.82 on revenue of $196.02 billion. The quarter includes Amazon's Prime Day event, which was held June 23-26. Bank of America estimated $21.6 billion in goods sold during the event, up 5% from 2025, while eMarketer projected Amazon would capture over 60% of sales during the four-day period.
Consumer spending signals remain mixed. William Stern, CEO of small-business lender Cardiff, told Reuters before Prime Day that "people just don't have the cash right now," noting shoppers are buying fewer big-ticket items and focusing on basics. However, U.S. families are expected to spend around $922 on back-to-school shopping this year, a 47% jump from 2025, according to Reuters. With food and gas prices elevated, more consumers are seeking bargains, prompting Amazon, Walmart Inc. (NYSE:WMT), Target Corp. (NYSE:TGT), and Best Buy Co., Inc. (NYSE:BBY) to launch sales earlier than usual.
Margins are under pressure as retailers emphasize promotions. Jeffrey Degner, a research fellow at the American Institute for Economic Research, told Reuters that August and September could be "a lower-margin timeframe" for retailers as they push value deals on less trendy school merchandise. Morgan Stanley noted that in 2025, Amazon and Walmart together captured about 71 cents of every new dollar spent online.
Amazon Web Services (AWS) remains the primary driver of the company's premium valuation, but capital expenditure continues to weigh on the narrative. In the first quarter, AWS sales grew 28% to $37.6 billion, with operating income jumping to $14.2 billion. Free cash flow over the trailing 12 months was just $1.2 billion, as spending on property and equipment surged by $59.3 billion, largely tied to AI investments. CEO Andy Jassy highlighted that "AWS is growing 28%" and noted the company's chip unit has reached a $20 billion revenue run rate.
