Weekly forecast: Amazon shares drop 12% as investors react to spending plans
Amazon shares fell 12% over the past week, reflecting a sharp investor reaction to the company’s quarterly earnings and, more importantly, its future spending plans.
The sell-off was not driven by Amazon’s current operating performance. The company reported record fourth-quarter revenue, up 14% year over year to $213.4 billion, net income of $21.2 billion, and 24% growth in AWS sales to $35.6 billion.
Instead, investors were alarmed by Amazon’s plans to significantly increase spending in 2026, which could limit dividend potential and pressure profitability. The company announced plans to invest around $200 billion, primarily in infrastructure expansion, artificial intelligence, chips, robotics, and satellite technologies.
Investors viewed these plans as a serious risk to near-term earnings and free cash flow, as such massive expenditures could delay returns on investment.
In addition, while Amazon’s quarterly revenue exceeded expectations, earnings per share (EPS) came in below forecasts, and operating income guidance for the next quarter was less optimistic. These factors further fueled concerns about profitability in the coming months.
As a result, profit-taking and broad selling pressure pushed Amazon shares down from $245 to around $210 at the time of writing.
Rebound potential remains high
Following the sell-off, AMZN shares have fallen below key moving averages. However, the RSI (14) indicator dropped to 27.49, below the neutral level, signaling oversold conditions and the potential for a rebound toward the $225–231 resistance zone.
AMZN daily stock chart. Source: TradingView
A bullish scenario would involve a recovery above the key moving averages (SMA 20, 50, 100, and 200), opening the way for a move toward $232–240 and higher. This outlook is supported by Amazon’s strong fundamentals, with analyst price targets around $280 or above.
That said, such a scenario would likely require positive catalysts, including company statements on cost discipline or measures to improve efficiency without sacrificing revenue growth.
If negative sentiment intensifies, AMZN shares could continue falling toward the psychological $200 level or below. However, this area represents a broad support zone that could help reduce volatility and limit a deeper sell-off.
As we wrote, weak guidance and capital spending plans worry investors — Amazon stock drops 9.23%
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