Amazon's aggressive artificial intelligence spending has triggered a market backlash, with shares plunging 12% in February — their worst monthly performance since December 2022. The e-commerce and cloud giant's $200 billion capital expenditure target for 2025, aimed at expanding data centers and computing capacity, has investors questioning whether the returns justify the massive investment. The stock became the worst performer among the so-called Magnificent Seven tech giants.

Wall Street's patience is wearing thin as Amazon's free cash flow is projected to turn negative $524.2 million in 2026, marking the company's first negative cash flow year since 2022. Despite reporting $7.7 billion in free cash flow in 2025, the aggressive spending has pushed Amazon's return on invested capital down to 12.4% from 14.8% just two quarters earlier. The company's stock now trades at roughly 22 times estimated earnings, its biggest discount to the Nasdaq 100 Index on record.

Yet some investors see opportunity in the selloff. With 78 of 83 analysts maintaining buy ratings and a 12-month price target suggesting a 35% upside, Amazon remains a consensus favorite despite recent underperformance. Portfolio managers argue that if investments prove excessive, Amazon can simply dial back spending and see cash flow rebound. The company's position as the world's largest company by revenue and its strategic moves, including a $50 billion investment in OpenAI, suggest the AI push may still pay off.