Amazon shares fell by 4% on Friday after the company announced plans to spend over $100 billion this year on artificial intelligence (AI) initiatives, according to CEO Andy Jassy. The tech giant also offered a softer-than-expected sales forecast.
Despite concerns about increased spending, analysts remain bullish about Amazon’s stock, with some cutting their price targets. Citi analysts maintained a “buy” rating and reduced their target from $275 to $273, citing AI expansion as a key factor in alleviating capacity constraints. JPMorgan analysts also trimmed their price target to $270, noting that the company’s clear path to AI monetization through AWS would justify the spending.
Amazon’s move follows similar announcements by its peers Google (Alphabet), Meta, and Microsoft, which plan to invest hundreds of billions of dollars in AI initiatives this year. The increased focus on AI “puts an even higher importance” on each platform’s ability to show material incremental engagement, according to Morgan Stanley analysts, who maintained a $280 price target for Amazon stock. Despite Friday’s losses, Amazon shares have gained nearly a third of their value over the past 12 months.
Source: https://www.investopedia.com/amazon-stock-slides-friday-amid-concerns-about-ai-spending-soft-forecast-8788167