Shares of Amazon (AMZN) fell on Friday after analysts adjusted their price targets in response to the tech giant’s increased spending plans and a softer-than-expected sales forecast. CEO Andy Jassy indicated during Thursday’s earnings call that Amazon expects to spend more than $100 billion on capital expenditures this year, with the majority of this investment going toward building out its AI infrastructure.
Despite the higher spending, which is aimed at boosting AI capacity and alleviating capacity constraints in Amazon Web Services (AWS), analysts have raised some concerns. Citi analysts maintained a “buy” rating for the stock but lowered their price target to $273 from $275, citing the weak sales forecast and the significant capital expenditures. JPMorgan analysts also expressed confidence in Amazon’s AI strategy but reduced their price target to $270 from $280, adjusting their net sales estimates for 2025 and 2026.
Amazon’s plans to invest heavily in AI follow similar moves by its Big Tech counterparts. Google parent Alphabet (GOOGL) announced it would spend $75 billion on AI infrastructure this year, while Meta (META) plans to invest $60 billion to $65 billion, and Microsoft (MSFT) aims to spend $80 billion for its 2025 fiscal year. As the competition intensifies in AI, Morgan Stanley analysts emphasized the growing importance for each company to show significant incremental engagement from their platforms, maintaining a $280 price target and an “overweight” rating for Amazon.
Despite the decline in stock price, which saw Amazon shares fall about 4% to $229.15 on Friday, the stock has still gained nearly a third of its value over the past year. This suggests that long-term investors may still remain optimistic about the company’s potential in AI and cloud services.
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