Amazon.com Inc shares posted their longest streak of daily losses in almost 20 years, as investors continue to question how much the e-commerce and cloud-computing company spends on capital expenditures.
Shares fell 0.4 percent on Friday last week, their ninth straight negative session. This is the longest losing streak for the stock since another nine-day drop that ended in July 2006. The stock shed 18 percent over the latest stretch, erasing about US$463 billion in market valuation. Shares closed at their lowest since May last year.
Much of the stock’s drop can be traced to results earlier this month, after Amazon said it would spend US$200 billion this year on data centers, chips and other equipment — far more than had been expected.
Photo: Reuters
“If Amazon is now spending so much that it has negative cash flow, that’s a major concern and a red flag, and investors are increasingly viewing it as such,” Ameriprise Financial Services Inc chief market strategist Anthony Saglimbene said.
Investors have become increasingly concerned about how much big tech companies are spending on artificial intelligence (AI), and the issue weighed on Microsoft Corp and Alphabet Inc. The four biggest spenders — Amazon, Alphabet, Microsoft and Meta Platforms Inc — have together forecast capital expenditures of about US$650 billion this year.
If these big tech companies “have negative or weaker cash flow on account of this spending, that’s a dynamic shift in how they should be valued, especially if we go through a period of market stress or AI evolves in a way that they or the market is not anticipating,” Saglimbene said.
Amazon shares are down about 17 percent this month, on pace for their biggest monthly percentage drop since April 2022. The NASDAQ 100 Index is down 3.2 percent this month.
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