Amazon Stock AMZN Threatens Breakdown As Sector Downgrades, If Support Goes
Amazon's once-powerful momentum is now diminishing as investors react to the company's massive debt, increasing AI spending, and growing...
Quick overview
- Amazon's stock has dropped over 13.5% from its all-time high, erasing gains made after the Q3 earnings release.
- The company announced a $15 billion bond issuance, raising concerns about its reliance on debt amid escalating AI costs.
- Analysts have downgraded Amazon, citing skepticism about the profitability of its AI investments compared to traditional cloud computing.
- Technical indicators show a deteriorating trend for Amazon's stock, with key support levels being tested.
Live AMZN Chart
[[AMZN-graph]]
Amazon’s once-powerful momentum is now diminishing as investors react to the company’s massive debt, increasing AI spending, and growing concerns about its long-term value generating.
A Brutal Pullback Erodes Post-Q3 Gains
Amazon (NASDAQ: AMZN) is under intense pressure, with the stock tumbling more than 4% on Tuesday and now down 13.5% from its all-time high reached in early November. The slide has effectively erased all gains made after the Q3 earnings release, leaving the stock dangerously close to a technical breakdown. What was once a smooth uptrend has turned sharply lower as confidence evaporates across the AI-exposed mega-cap names.
The broad selloff in AI-linked equities has only intensified after high-profile downgrades, raising doubts that Amazon’s massive AI investments will yield returns commensurate with their cost.
Bond Sale Raises Concerns Over Mounting Spending
Amazon rattled investors further by announcing a $15 billion bond issuance late Monday — its first debt sale since 2022. While the company insists the funds will support business investments, future capex, and debt repayment, the timing could not have been worse. Markets are growing increasingly nervous about tech giants’ escalating AI-infrastructure bills, and Amazon’s decision only reinforced fears that the company is leaning too heavily on borrowed capital to sustain ambitions that may not pay off.
The message to the market was clear: the cash burn for AI expansion is accelerating, and the bill is getting uncomfortably large.
Downgrades Highlight Growing Skepticism
The negative sentiment deepened after Rothschild & Co. Redburn downgraded Amazon from “buy” to “neutral,” citing troubling signs that the AI boom may not replicate the profit engine of cloud computing’s early years. Microsoft was cut as well, signaling a broader reassessment of AI valuations.
Analyst Alexander Haissl was blunt in his note: generative AI requires six times the capital to generate the same value as traditional cloud infrastructure. He warned that, at current levels, many AI initiatives may turn value-destructive rather than accretive. Needham echoed the same concerns, pointing to accelerating AI-related capex that investors increasingly view as excessive.
The market’s reaction suggests that Wall Street is no longer willing to accept “AI spending” as a blanket justification for soaring capital outlays.
Technical Breakdown Looms as Sellers Take Control
Technically, Amazon’s chart is deteriorating at a worrying pace. The stock opened the week with a bearish gap and quickly fell below its 50-day simple moving average, signaling weakening trend strength. By Tuesday, sellers pushed AMZN beneath its 100-day SMA, a level that had previously acted as dependable support.
AMZN Chart Daily – Will The 50 SMA Break?
The weekly chart is even more concerning: the 50-week SMA is now under assault. A decisive break below this support could open the door to a deeper slide toward the 100-week SMA near $200 — and potentially lower if macro pressure persists. Momentum indicators have flipped bearish, and volume on down days continues to rise, underscoring the severity of the selling.
A Market Losing Patience
With AI hype cooling, debt rising, valuations stretched, and technical support failing, Amazon now faces one of its most uncertain periods in recent years. Unless the company can demonstrate that its aggressive AI spending will translate into durable profits, the stock remains vulnerable to further downside.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save