Amazon Stock Struggles at $255 Amid AI Expansion Costs

Amazon's stock has been struggling to gain traction this year despite its strengths in e-commerce, cloud computing, and artificial intelligence. The company trades at around $255 per share, a price that may seem attractive but comes with significant costs associated with its AI expansion.

The AI push has led to Amazon's forecasted capital expenditures reaching $220 billion for the current year, up from $132 billion in 2025. This has resulted in the company borrowing tens of billions of dollars despite having $123 billion in liquidity. Moreover, Amazon reported a negative free cash flow of $7.6 billion over the trailing 12 months.

However, Amazon's e-commerce segments continue to drive growth, and its strong financial position should help it survive even if the worst fears of an AI bust materialize. The company's spending on AI has likely accelerated revenue growth, with yearly net sales increasing by 20% in the second quarter of 2026, up from 13% one year ago.

The cloud computing business Amazon Web Services saw its annual growth rate surge from 17.5% to 37% over the same period. The company's P/E ratio has fallen to 21, a relatively low level considering its past performance when it typically sold for above 50 times earnings.