Amazon has lost $450B in value during this historic losing streak. Here's what's dragging it down

On Tuesday, Amazon's stock experienced significant volatility as it struggled to recover from a notable downturn. If the shares close lower, it would mark the company's tenth consecutive day of losses, tying its record streak from 1997. This nine-day decline, which culminated on Friday, represents the worst losing streak for the company since 2006. Since February 2, Amazon's stock has plummeted by approximately 18%, resulting in a staggering loss of around $450 billion in market capitalization. This decline has prompted investors to reevaluate the company's ambitious plans for artificial intelligence (AI) investments. The recent sell-off was triggered by Amazon's fourth-quarter earnings report, which revealed a forecasted capital expenditure of $200 billion for the year—a nearly 60% increase compared to the previous year and exceeding Wall Street's projections by over $50 billion. A significant portion of this spending is earmarked for AI-related projects, which necessitate extensive infrastructure, including data centers, chips, and networking equipment. Investor anxiety surrounding substantial AI investments across the tech sector has been mounting, with concerns that these expenditures could erode or eliminate free cash flows. Major players like Alphabet, Microsoft, and Meta are expected to collectively spend around $700 billion this year as they expand their infrastructure to support AI development. On Tuesday, Alphabet's shares fell by over 1%, while Microsoft and Meta also saw slight declines, marking potential fifth straight negative sessions for both companies. In defense of the hefty expenditures, Amazon CEO Andy Jassy expressed confidence during a conference call that these investments will ultimately yield robust returns on capital. Additionally, Amazon Web Services CEO Matt Garman highlighted in a recent CNBC interview that the increased capital expenditures will position the company to capitalize on AI opportunities within the cloud market. Following the earnings report, analysts at Wedbush stated that Amazon is currently in a 'prove it mode' phase, indicating the need for the company to demonstrate tangible returns on its capital spending. They noted that the increased expenditure will continue to weigh on investor sentiment until more solid results are shown. Despite the challenges, Wedbush maintains an outperform rating on Amazon shares.