Amazon Drops 4.6% Amid Increased Capital Spending Plans from Tech Peers
On Thursday, Amazon (NASDAQ: AMZN) fell approximately 4.6%, driven by broader concerns over increased capital spending plans among major tech companies rather than any direct news about the company itself. Alphabet and Tesla announced significant increases in their 2026 capital expenditures—$205 billion for Alphabet and $25 billion for Tesla—which raised investor worries that Amazon's own AI-related capex of around $200 billion could also rise further when it reports earnings on July 30. The broader tech sector, including all members of the 'Magnificent Seven,' experienced a decline as investors priced in higher spending and potential impacts to free cash flow. Amazon’s trailing twelve months (TTM) free cash flow had already dropped from $25.9 billion to just $1.2 billion by Q1 2026, adding pressure on its financial outlook. Despite the drop, Amazon Web Services showed strong growth in Q1 with a revenue increase of 28% year-over-year to $37.6 billion—its fastest pace in nearly four years. However, investors remain cautious ahead of July 30’s earnings report and are watching for signs that AWS can maintain its momentum without further capital spending increases.
Topics: AI investment Amazon capital spending free cash flow tech sector