Why Amazon Stock Lost 12% in February

Shares of Amazon (NASDAQ: AMZN) were heading lower last month as tech investors fretted over AI disruption and balked at Amazon's forecast for $200 billion in capital expenditures this year.

Though the tech giant reported a solid fourth-quarter earnings report, the capex number was enough to send the stock lower following the report, and it stayed down for the duration of the month. According to data from S&P Global Market Intelligence, the stock finished February down 12%.

As you can see from the chart below, the stock fell early in the month on the earnings report and stayed down from there.

AMZN data by YCharts

What happened with Amazon

As the chart above shows, the stock was already falling before it tumbled on its earnings report, losing 6%.

Prior to that, shares had been spooked by a broader sell-off in tech stocks that hit software stocks particularly hard, as investors fear that new AI tools from Anthropic and other AI start-ups could disrupt incumbents.

While Amazon doesn't seem directly exposed, as an incumbent and an industry leader, some of its businesses could be at risk.

The big news out last month was the earnings report.

Amazon delivered solid results with revenue up 14% to $213.4 billion and operating income increasing from $21.2 billion to $25 billion. The company reported double-digit growth in all three of its business segments, including 24% growth in Amazon Web Services (AWS), its cloud infrastructure division.

However, Amazon said it planned to spend $200 billion in capital expenditures this year, more than any of its "Magnificent Seven" peers, and enough to lead investors to sell the stock. By contrast, Amazon spent $83 billion in capex in 2025, and spending $200 billion this year will almost certainly drive its free cash flow into the red.

Image source: Amazon.

What it means for Amazon

Amazon has undergone previous cycles of capex spending on e-commerce fulfillment centers and on AWS data centers in the past, and always comes out on the other side.

The risk here is that there's an AI bubble, and that the $200 billion in capex never delivers the profit that Amazon expects it to, but its hyperscaler peers are doing the same thing.

Amazon needs to compete in AI, and spending aggressively is table stakes right now. Whether it pays off remains to be seen, but the company's overall growth remains solid, and the stock is reasonably priced at a price-to-earnings ratio of 29.3, which is only modestly more expensive than the S&P 500. There's no reason to panic here.

Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.