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Amazon(NASDAQ:AMZN), global e-commerce and cloud computing services provider, closed Thursday at $199.6, down 2.20%. The stock moved lower as investors continued reacting to Amazon’s aggressive artificial intelligence-driven capital spending and recent analyst target cuts while weighing AWS growth and long-term AI returns.
Trading volume reached 78.6 million shares, coming in about 70% above compared with its three-month average of 46.3 million shares. Amazon IPO’d in 1997 and has grown 203,746% since going public.
How the markets moved today
S&P 500(SNPINDEX:^GSPC) fell 1.57% to 6,833, while the Nasdaq Composite(NASDAQINDEX:^IXIC) lost 2.03% to finish at 22,597. Within e-commerce and cloud computing, industry peers were mixed, as Alibaba Group(NYSE:BABA) closed at $158.73 (-3.40%) while Walmart(NASDAQ:WMT) finished at $133.64 (+3.78%).
What this means for investors
AI capital spending concerns continued to ripple through the stock market today. That led Daiwa Securities Group to cut its Amazon stock price target from $300 to $280 citing execution risk from the company’s $200 billion AI infrastructure spending plans.
Long-time investors might remember a time when similar concerns dogged Amazon stock. As a young company, Amazon poured money into growing its business, keeping cash flow in negative territory for years.
That spending paid off, however, making Amazon the e-commerce juggernaut it has become. While there’s no guarantee that similar returns will follow these AI investments, Amazon has earned the benefit of the doubt. A stock slide from the current uncertainty may be another good buying opportunity for Amazon stock.
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Howard Smith has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
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