Amazon Falls 4% as Senate China Probe and AI-Spending Jitters Weigh Ahead of Earnings
Amazon shares dropped 4% to $234.81 on Thursday, falling below their 50-day moving average amid a broader tech pullback. The decline was driven by two main factors: a U.S. Senate Small Business Committee investigation into allegations of Chinese influence on Amazon's marketplace, and sector-wide AI spending concerns after Alphabet's capex guidance hike triggered a rotation out of mega-cap AI names. Alphabet fell 6% and Meta Platforms dropped 4% as investors questioned whether AI returns justify soaring infrastructure costs. Amazon's own AI buildout has consumed capital, with trailing-twelve-month free cash flow collapsing to $1.2 billion. Separately, CNBC reported layoffs in Amazon's artificial general intelligence unit, framed as a strategic realignment. Despite the pullback, Bank of America reiterated a Buy rating with a $310 price target, citing AI-driven AWS acceleration. Amazon is set to report Q2 2026 earnings on July 30.
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