Amazon Faces Investor Scrutiny Amidst Heavy AI Investments
Amazon's heavy investments in AI are under scrutiny as stock performance lags behind competitors like Meta.
Key Points
- • Amazon's stock rose only 3% in 2025, trailing behind the S&P 500's 7.1% gain.
- • Projected $104 billion investment in AI and logistics this year.
- • Q2 earnings expected at $1.32 per share, reflecting a 4% increase in EPS.
- • AI advancements may lead to significant savings in logistics operations.
Amazon.com Inc. is ramping up its investments in artificial intelligence (AI), but the tech giant's stock performance is lagging behind competitors. As of mid-2025, Amazon's shares have only increased by 3% this year, contrasted with a substantial 20% surge in Meta Platforms Inc.'s stock, driven largely by their aggressive AI initiatives. Investors are currently seeking tangible outcomes from Amazon's AI spending, particularly ahead of the upcoming quarterly earnings report.
Analysts estimate Amazon's Q2 earnings will show a 4% increase in earnings per share (EPS) to $1.32 and a 9% increase in revenue to $162 billion, which falls short of the 15% average growth expected of other major tech companies. Amazon is projected to invest an impressive $104 billion in capital expenditures this year to bolster its AI and logistics infrastructure, leading all companies in the S&P 500.
While Amazon's diverse operations span both cloud services and retail, the effectiveness of its AI strategy is still under scrutiny. The company's AWS division is anticipated to see increased demand, but retail operations may also benefit significantly. For instance, the newly implemented Rufus chatbot aims to improve customer experience in navigation and shopping efficiency.
Furthermore, enhancements in robotics could yield notable savings; Bank of America projects a potential saving of over $7 billion annually by 2032 as Amazon automates more logistics tasks. Despite challenges like tariffs affecting e-commerce, the sentiment remains that AI could be critical in transforming Amazon's business landscape ahead. As CEO Andy Jassy highlighted, shifts towards automating tasks may lead to a leaner workforce, bearing implications for future productivity improvements throughout the organization.