Amazon Stock Drops 4.5% Amid Concerns Over AI Spending and Weakening Cash Flow

Amazon's stock has fallen sharply ahead of its July 30 earnings report, raising concerns about the sustainability of its investment-heavy strategy. The decline comes as investors reassess the company's aggressive AI spending and weakening free cash flow.

The company's shares have dropped around 4.5% to approximately $233, with investors questioning whether Amazon's heavy spending on AI and cloud infrastructure will generate sufficient returns to justify the scale of investment.

Amazon Web Services (AWS) remains central to the company's long-term growth strategy, but its aggressive AI expansion is also raising questions about spending discipline. The company has significantly increased capital expenditures as it expands logistics networks, data centres, cloud infrastructure, and AI capacity.