Amazon ends 9-day losing streak, with over $450 billion in market value lost during the period

Amazon's stock closed up more than 1% on Tuesday, ending a nine-day losing streak during which its market value evaporated by hundreds of billions of dollars.

From February 2 through last Friday, the stock's market value shrank by approximately 18%, marking the worst losing streak since 2006, with a decline of over $450 billion, as investors questioned the rationale behind its artificial intelligence investment plans.

The sell-off in Amazon’s shares was directly linked to the company’s fourth-quarter earnings report released earlier this month.

Amazon stated that capital expenditures are expected to reach $200 billion this year, nearly 60% higher than last year and more than $50 billion above Wall Street's expectations. Most of the investment will go toward AI-related projects, including infrastructure such as data centers, chips, and network equipment.

Investors are increasingly worried about the massive AI investments by tech companies and the potential risks of shrinking or even depleting free cash flow.

The combined capital expenditures of Alphabet, Microsoft, Meta, and Amazon are projected to reach $700 billion this year, as each company accelerates infrastructure expansion.

On Tuesday, shares of Alphabet and Microsoft each fell more than 1%, while Meta closed down less than 1%; both Microsoft and Alphabet have closed down for five consecutive trading days.

Amazon CEO Andy Jassy defended the company’s massive investments, saying in an analyst call that he is confident these investments will yield considerable returns on capital.

Amazon Web Services (AWS) CEO Matt Garman also explained the rise in spending, saying in an interview last week that increased capital expenditures will allow the company to seize AI opportunities in cloud computing.

Wedbush analysts wrote in a report following Amazon’s fourth-quarter earnings that the company is currently in a “prove-it stage” and needs to demonstrate to investors that its capital expenditures can generate returns.

“While investors digest this guidance, increased spending will continue to weigh on the share price, and more tangible returns may need to be seen before the market regains confidence.” The firm rates Amazon stock as Outperform.

Andrew Boone, Managing Director and Research Analyst at Citizens Financial Group, said Tuesday that despite the recent plunge in the stock price, he remains bullish on AWS. Citing Jassy’s remarks, Boone noted that Amazon plans to double data center capacity by 2027, which is an undervalued growth driver for the cloud business. “We believe that as more capacity comes online, AWS revenue growth will accelerate further,” Boone said in an interview.

Editor: Ding Wenwu