Shares trade near historically low valuation as investors weigh massive AI investments and FTC advertising lawsuit
Amazon (AMZN) is being left behind in the latest artificial intelligence-driven market rally, even as several major technology stocks push toward record highs.
Amazon shares have declined roughly 2.4% over the past month, contrasting with gains for Nvidia, AMD, Microsoft, Alphabet and Meta. At approximately $251 per share and 20 times trailing earnings, Amazon is trading at its lowest valuation as a public company, according to TrendSpider.
Several factors appear to be weighing on investor sentiment. The Federal Trade Commission and 22 states recently filed a lawsuit alleging Amazon’s advertising practices resulted in roughly $20 billion in overcharges to advertisers since 2019. Amazon disputes the allegations, arguing advertisers receive significant value from its platform.
Investors are also scrutinizing Amazon’s aggressive artificial intelligence infrastructure spending. The company recently increased its expected 2026 capital expenditures to approximately $220 billion as it expands AI and cloud capacity.
Evercore ISI analyst Mark Mahaney expects spending to climb even further, estimating capital expenditures of $320 billion in 2027 and $370 billion in 2028.
While those investments could strengthen Amazon’s long-term AI position, Mahaney estimates they could push free cash flow to approximately negative $50 billion in both 2027 and 2028, creating near-term concerns for investors.
