What Happened?
Shares of cloud computing and online retail behemoth Amazon (NASDAQ: AMZN) fell 3.4% in the afternoon session after concerns regarding lofty artificial intelligence valuations triggered a pullback in the technology sector.
Nvidia slid ahead of its earnings report, dragging down fellow "Magnificent Seven" peers despite a major partnership announcement with Anthropic, as investors increasingly question the durability of the AI rally.
Market sentiment was further dampened by Bitcoin dropping below $90,000, signaling reduced risk appetite, and growing anxiety that the Federal Reserve may pause rate cuts in December, with the implied probability of a cut falling to roughly 50%. This combination of continued de-risking and valuation skepticism put the S&P 500 on pace for its fourth consecutive daily decline.
Separately, Rothschild & Co Redburn downgraded the stock to Neutral from Buy, citing concerns over future growth at its Amazon Web Services (AWS) division and the profitability of its artificial intelligence investments.
The research firm noted that while it was previously optimistic about AWS's position in generative AI, the division had already reaccelerated as expected, leaving "limited scope for meaningful upside." The firm argued the return on investment for AI would not be like the initial "Cloud 1.0" shift. The report added that AI remained "dilutive to returns" at AWS, as the company's capital spending led to a lower return on investment than anticipated.
The shares closed the day at $222.65, down 4.4% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Amazon? Access our full analysis report here.
What Is The Market Telling Us
Amazon’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 15 days ago when the stock gained 4.9% on the news that the company announced a landmark $38 billion, multi-year cloud services agreement with OpenAI, the creator of ChatGPT. The seven-year strategic partnership provided OpenAI with access to Amazon Web Services (AWS) infrastructure, including hundreds of thousands of Nvidia graphics processing units to run and scale its artificial intelligence workloads. This marked OpenAI's first major cloud collaboration outside of Microsoft and was seen as a significant win for Amazon's cloud division. The news came on the heels of a strong third-quarter financial report, where AWS had already shown impressive growth with sales up 20% year-over-year to $33 billion. The combination of the new, massive contract and recent strong performance fueled investor optimism, adding nearly $140 billion to Amazon's market value.
Amazon is up 1.1% since the beginning of the year, but at $222.58 per share, it is still trading 12.4% below its 52-week high of $254 from November 2025. Investors who bought $1,000 worth of Amazon’s shares 5 years ago would now be looking at an investment worth $1,433.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.
