Amazon (NASDAQ:AMZN | AMZN Price Prediction) has long set the pace in e-commerce, cloud computing through its AWS division, and as a leading force in artificial intelligence (AI) infrastructure. Yet the company is on the verge of a new record that investors neither expected nor wanted: If trends continue, Amazon will break its longest losing streak.
With Friday’s 0.4% tick lower to close at $198.79 per share, Amazon stock has now declined for nine consecutive days — matching its worst streak from all the way back in July 2006. If Monday sees another dip, it will surpass that mark. Investors may feel dismayed by the more than 18% fall since the streak began — erasing about $463 billion in market value — but in fact, they should be excited that Amazon is down so much.
The Drivers of the Recent Decline
The slide in Amazon’s stock picked up speed following its fourth-quarter earnings report earlier this month. While the company beat revenue expectations with $213.39 billion against estimates of $211.5 billion, it missed on adjusted earnings at $1.95 per share versus the forecasted $1.96. More critically, Amazon guided for capital expenditures of about $200 billion in 2026, focused on data centers, chips, and other AI-related equipment — far exceeding analysts’ expectations by more than $50 billion.
This spending plan raised alarms about potential negative free cash flow and higher future expenses from depreciating assets. Anthony Saglimbene, chief market strategist at Ameriprise, noted that such heavy outlays turning cash flow negative represent a major concern for investors.
Additionally, first-quarter guidance for net sales of $173.5 billion to $178.5 billion and operating income of $16.5 billion to $21.5 billion fell short of some market hopes, amplifying worries about the balance between growth and profitability during the AI push. Broader industry fears over escalating AI costs among tech giants also contributed to the sentiment, with Amazon’s slide mirroring pullbacks in peers like Microsoft (NASDAQ:MSFT).
Why This Pullback Is a Golden Opportunity
Despite the current downturn, Amazon’s stock had been on a strong run, more than doubling in value over the past three years leading up to this decline — from around $100 per share in early 2023 to a peak of $254 in November. This recent 18% drop represents a healthy correction after such gains, offering a chance for investors to buy in at lower levels.
History shows Amazon has weathered sharp pullbacks before and emerged stronger. For instance, it lost about 30% of its value beginning almost exactly one year ago following President Trump’s announcement of sweeping tariffs, including 145% on Chinese imports and 10% on others. The tariffs strained Amazon’s reliance on international sellers, leading to price hikes and a 7% stock drop in the two days after the initial announcement.
Yet Amazon recovered, gaining some 45% in the ensuing year as it adapted through diversified sourcing and strong AWS performance. These dips allow savvy investors to acquire shares cheaper than when the stock is running higher. Investors should root for occasional sharp drops in strong stocks like Amazon, as they create entry points for long-term accumulation.
Key Takeaway
Amazon is positioned to rebound due to several core strengths. AWS, the world’s largest cloud provider, saw its fastest growth in three years in the recent quarter, with annual run-rate revenue at $142 billion, driven by surging AI demand. CEO Andy Jassy emphasized that the $200 billion capex will support immediate monetization of new capacity.
The company’s diversified revenue — spanning e-commerce, advertising, and cloud — provides a robust defense against concentration risk, with projections for revenue this year at $805 billion and operating margins at 14.4%. Past investments, like those in AWS during 2006’s similar streak, paid off handsomely, turning early spending into dominant market share. Investors profited, too: Amazon stock has rocketed over 12,400% in the last 20 years.
Analysts see significant upside potential in Amazon, with target prices implying 44% gains to $287 per share within a year. For great companies like Amazon with a long runway of growth ahead, short-term pain is only a stepping stone to long-term gains investors can profit from.
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