Aggressive AI spending plan backlashes against stock price of Amazon.com, Inc. (AMZN.US), plunging by 12% in February, marking the worst monthly performance since the end of 2022.

Amazon.com, Inc. (AMZN.US) holds a leading position in the artificial intelligence competition, but the market is becoming increasingly unwilling to foot the hefty bill to maintain this advantage. Due to Wall Street's growing caution towards its aggressive AI spending plans, Amazon.com, Inc.'s stock price fell by 12% in February, marking its worst monthly performance since December 2022. It not only became the weakest performer among the "Big Tech Seven," but also ranked among the top losers in the S&P 500 index. Since the beginning of 2025, the stock has only risen by 5.2%, also ranking at the bottom among the Big Seven. Market concerns mainly focus on the rapid expansion of capital expenditures eroding cash flow and return rates. Amazon.com, Inc. previously announced that it will invest up to $200 billion this year in data centers, chips, and other equipment construction, a scale far exceeding market expectations and dragging down its operating profit guidance. Amazon.com, Inc.'s cloud computing service (AWS) recorded its fastest quarterly growth in over three years but struggles to hide the reality that profitability prospects are being suppressed by expenses. According to data, the company's free cash flow is estimated to be negative $524 million in 2026, the first time it's been negative since 2022, and it remains at $7.7 billion in 2025. Last Friday, Amazon.com, Inc. announced once again its investment of $50 billion in OpenAI, while OpenAI will also spend an additional $100 billion over the next eight years under a cooperation agreement with AWS. This "reciprocal investment" model further strengthens the company's determination to bet on AI infrastructure but also exacerbates investors' anxiety about the timing of returns. The company's return on invested capital (ROIC) in the fourth quarter was 12.4%, significantly lower than the peak of 14.8% in the previous two quarters. In a broader market environment, large technology companies with high capital expenditures are also facing scrutiny. Microsoft Corporation (MSFT.US) faced pressure after disclosing a significant increase in capital spending, and CoreWeave (CRWV.US) plummeted due to raising capital expenditure targets and announcing greater losses. The shift in investor sentiment reflects the market's decreasing patience for the "burning money for growth" model. However, from a valuation perspective, Amazon.com, Inc.'s current estimated P/E ratio of around 22 times is significantly lower than the historical average of 50 times over the past 20 years and is close to its largest historical discount relative to the Nasdaq 100 index, even much lower than Walmart Inc.'s (WMT.US) valuation of over 43 times. Despite recently surpassing Walmart Inc. to become the world's highest revenue-generating company, its stock performance has not reflected this scale advantage. Overall, Wall Street remains confident in Amazon.com, Inc.'s prospects. Data shows that out of 83 analysts covering the stock, 78 give it a "buy" rating, with no one suggesting selling. The average target price over 12 months is $282.65, representing about a 35% upside from the current stock price. Some analysts believe that the cooperation with OpenAI will bring continuous demand to AWS, and the company's in-house Trainium chip and long-term investments in Anthropic will support its AI ecosystem. Additionally, Amazon.com, Inc.'s accelerated application of Siasun Robot & Automation technology in warehousing and logistics is expected to improve efficiency and enhance long-term profitability. Although the high investment in the short term is putting pressure on financial metrics, supporters believe that the company still has the ability to adjust the pace according to investment effectiveness. Some fund managers point out that Amazon.com, Inc. may be one of the "most cost-effective" targets among the Big Seven, striking a relative balance between growth rate, valuation level, and strategic layout. The current market's disagreement lies in whether investors are willing to continue bearing the interim profit and cash flow volatility risks for future AI returns.