Amazon Slumps Amid $220 Billion AI Spending Spree

Amazon's stock price slipped to $260.7675 on Tuesday morning, despite lower Treasury yields and a strong performance from Amazon Web Services (AWS). The e-commerce giant fell approximately 0.5% as investors expressed concerns over the company's capital spending.

The operating machine at Amazon remains fierce, with second-quarter revenue surging 20% to $200.6 billion and AWS sales exploding 37% to $42.2 billion. Advertising revenue also jumped 26% to $19.8 billion.

However, management raised expected 2026 capital spending to roughly $220 billion, which equals about 110% of Amazon's latest quarterly revenue. This has put a strain on the company's free cash flow, which has already sunk to negative $7.6 billion.