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Market rebound ends sharp decline

Amazon shares edged higher Tuesday, breaking a nine-session losing streak that erased more than $450 billion in market capitalization and rattled investor confidence across the tech sector. The stock finished the session up just over 1%, offering a pause after nearly two weeks of relentless selling pressure.

Between early February and the end of the prior week, the company’s shares dropped roughly 18%, marking its steepest slide since 2006. The downturn pushed Amazon’s valuation down from around $2.5 trillion to near $2.05 trillion at its lowest point, reflecting growing skepticism about near-term profitability as the company ramps up spending.

AI spending fuels investor anxiety

The catalyst behind the sell-off was Amazon’s latest earnings release, which outlined plans for approximately $200 billion in capital expenditures this year — nearly 60% higher than the prior year and significantly above analyst expectations.

Most of that investment is earmarked for artificial intelligence infrastructure, including advanced data centers, custom chips, networking capacity, and expanded cloud computing resources. The spending surge comes as global demand for generative AI workloads accelerates, but it also raises concerns about pressure on margins and free cash flow over the next several quarters.

Across the broader tech landscape, total capital expenditures from Alphabet, Microsoft, Meta, and Amazon could approach $700 billion this year, underscoring the scale of the industry’s infrastructure race. Shares of several peers also dipped during the same period, reflecting a sector-wide reassessment of AI investment timelines.

Leadership defends long-term strategy

Amazon executives have sought to reassure investors that the spending wave is a strategic necessity rather than a risk. CEO Andy Jassy told analysts the investments are expected to generate strong returns over time, particularly as enterprise customers scale AI workloads on the company’s cloud platform.

Amazon Web Services CEO Matt Garman echoed that view, noting that expanded infrastructure will position the company to capture a larger share of the rapidly growing AI cloud market. The company has signaled plans to roughly double its global data-center capacity by 2027, a move analysts say could significantly accelerate revenue growth once utilization increases.

Wall Street reaction and outlook

Analysts remain divided but generally constructive on the long-term outlook. Some firms describe Amazon as being in a “prove-it phase,” meaning investors will want clearer evidence that rising capital intensity translates into stronger operating income and cash generation.

Despite the recent volatility, several research houses maintained bullish ratings, citing AWS’s dominant market position, Amazon’s expanding advertising business — which generated more than $50 billion in annual revenue last year — and continued strength in e-commerce logistics.

Market strategists note that short-term sentiment will likely hinge on quarterly updates around cloud growth, AI monetization, and operating margins. If early returns begin to materialize, the recent sell-off could be viewed retrospectively as a valuation reset rather than a structural shift.

The bigger picture

The episode highlights a broader turning point for mega-cap tech: investors are increasingly rewarding disciplined execution over pure growth narratives. For Amazon, the coming quarters will be crucial in demonstrating that its unprecedented AI spending cycle can translate into durable earnings expansion.

For now, the rebound offers temporary relief — but the real test will be whether the company can convert massive infrastructure bets into measurable financial returns.