Amazon drops 13% in a month as $200B capex spend spooks investors

Amazon.com Inc. shares fell 13% over the past month as investors weighed $200 billion in planned capital spending against concerns about consumer demand, pushing the stock into correction territory.

The decline pushed Amazon's price-to-earnings ratio to 28, below the S&P 500's average of 32 and a steep discount from the multiples above 50 it commanded in prior years, according to market data. The stock became the worst performer among the "Magnificent Seven" during the period, as the market questioned whether the e-commerce and cloud giant's massive infrastructure build would deliver adequate returns on invested capital.

In the first quarter of 2026, net sales rose 17% year over year, accelerating from 9% growth in the same period a year earlier. Net income reached $30 billion, a 77% increase, though nearly $16 billion came from investment-related gains. Operating income climbed 29%. AWS net sales grew 28%, nearly double the 16% compound annual growth rate Grand View Research projects for the cloud market through 2030. Online sales rose 12% annually, suggesting Amazon has found ways to sidestep the broader consumer slowdown that has worried analysts tracking household spending patterns.

The $2.6 trillion market cap means Amazon must create another $2.6 trillion in value for the stock to double, a scale that naturally compresses returns compared with smaller competitors. Still, with double-digit sales growth and a below-market earnings multiple, the stock may offer a buying opportunity for investors willing to look past the near-term capex cycle.

Amazon's $200 billion capex pledge is part of a broader industry trend. Alphabet Inc., Meta Platforms Inc., Microsoft Corp. and Amazon together project combined 2026 spending of as much as $725 billion, according to company filings — a figure larger than the gross domestic product of Switzerland or Turkey. Alphabet Chief Financial Officer Anat Ashkenazi said on the company's analyst call that the investments are "delivering strong growth as evidenced by the record revenue and backlog growth in Google Cloud." Microsoft Chief Financial Officer Amy Hood said the company expects to invest roughly $190 billion in capital expenditures in calendar year 2026, including about $25 billion from higher component pricing for memory chips.

The company holds $143 billion in liquidity, providing a buffer against the spending cycle. Any hyperscaler trimming forward capex guidance by more than 10% would directly pressure semiconductor suppliers including Nvidia Corp. and Broadcom Inc., which capture most of that spending, analysts have noted. The Vanguard Information Technology ETF slid 5% in a single week as semiconductor names corrected, reflecting the market's growing scrutiny of the AI infrastructure build. Nvidia's market cap of almost $4.7 trillion now exceeds Apple's roughly $4.2 trillion, while Microsoft has fallen 23% year to date.

The decline tests whether Amazon's valuation floor has been reached. With the stock trading at 28 times earnings — a discount to the broader market — the next catalyst will be the Q2 2026 earnings report, where investors will look for continued AWS acceleration and any signals that the consumer spending environment is stabilizing.

This article is for informational purposes only and does not constitute investment advice.