Amazon stock falls 2% despite analyst bullishness on AWS AI growth
- Amazon stock fell 1.58% to $256.18, underperforming the Nasdaq which gained 1.01%
- Rosenblatt initiated coverage with a Buy rating and $335 price target
- Analysts expect AWS growth to reach 45% by end of 2026, above Street estimates
- Citizens reiterated Market Outperform rating citing strong AI demand drivers
- Amazon holds top weight in Franklin Focused Dynamic Growth ETF at 9.86%
*this image is generated using AI for illustrative purposes only.
Amazon.com Inc. (NASDAQ: AMZN) shares declined nearly 2% on Thursday, lagging both the broader market and the consumer discretionary sector. The stock’s underperformance occurred despite positive analyst commentary regarding Amazon Web Services and artificial intelligence demand.
Analyst Outlook on AWS
Rosenblatt analyst Scott Devitt initiated coverage of Amazon with a Buy rating and a $335 price target. Devitt argues that investors undervalue the company’s AI opportunity. He expects AWS growth to reach 45% by the end of 2026, which is above the Street’s estimate of 38%. Additionally, he projects AWS annual revenue will exceed $335 billion by 2028.
Citizens analyst Andrew Boone reiterated a Market Outperform rating with a $315 price target. Boone pointed to strong growth at OpenAI and Anthropic as positive indicators for AWS. He expects rising AI usage to support cloud infrastructure demand and believes hyperscalers are unlikely to face significant excess server capacity.
Market Performance Context
Amazon shares remained under pressure even as the Nasdaq gained 1.01% and the S&P 500 rose 0.59%. The Consumer Discretionary sector fell 0.7%, but Amazon still underperformed this benchmark. At the time of publication, Amazon.com shares were down 1.58% at $256.18.
ETF Exposure Implications
Amazon carries significant weight in several major exchange-traded funds. This concentration means that any significant inflows or outflows for these ETFs will likely trigger automatic buying or selling of the stock.
| ETF Name | Ticker | Weight |
|---|---|---|
| Franklin Focused Dynamic Growth ETF | FFOG | 9.86% |
| Direxion Daily Magnificent 7 Bull 2X ETF | QQQU | 9.80% |
| Argent Large Cap ETF | ABIG | 9.20% |
What the Numbers Show
The divergence between the stock’s immediate price action and the long-term analyst projections highlights a disconnect between short-term market sentiment and structural growth expectations. While the Nasdaq gained 1.01%, Amazon fell 1.58%, indicating specific pressure on the name rather than broad market weakness. Analysts project AWS growth of 45% by 2026 against a Street estimate of 38%, suggesting a potential upside case that has not yet been priced into the current share price of $256.18.
What specific macroeconomic factors or sector-specific headwinds could be driving Amazon's underperformance despite bullish analyst sentiment on AWS?
How might the projected 45% AWS growth rate by 2026 impact Amazon's overall profit margins given the capital intensity of AI infrastructure?
Could significant outflows from high-concentration ETFs like FFOG and QQQU create sustained downward pressure on Amazon's stock price in the near term?
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