Amazon Stock Plunges on AI Spending Concerns Amid Regulatory Scrutiny

Amazon shares have fallen around 4.5% to approximately $233 as investors reassess the company's aggressive AI investment strategy and rising regulatory risks, ahead of its second-quarter earnings report on July 30.

The decline reflects several overlapping concerns, including escalating AI infrastructure spending, weakening free cash flow, and growing competitive pressure in various markets.

Amazon Web Services (AWS) remains central to the company's long-term growth strategy, but its aggressive AI expansion is raising questions about spending discipline and whether these initiatives will produce sufficient revenue and operating income to offset costs.

The company has significantly increased capital expenditures as it expands logistics networks, data centres, cloud infrastructure, and AI capacity, putting substantial pressure on cash generation and free cash flow.