What Happened?
Shares of cloud computing and online retail behemoth Amazon (NASDAQ:AMZN) fell 7.8% in the afternoon session after the company reported disappointing second-quarter results and provided a weak forecast for future growth.
The e-commerce and cloud computing giant pointed to slowing growth in its key Amazon Web Services (AWS) division and higher operating costs. Management explained that some AWS customers trimmed their spending due to the economic environment. The company’s financial chief also delivered a third-quarter revenue projection that missed analyst forecasts. A strong July jobs report, which raised fears of more aggressive interest rate hikes from the Federal Reserve, further pressured growth stocks and added to the negative sentiment around Amazon.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Amazon? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Amazon’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 8.9% on the news that President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10% or more.
From clothing brands and electronics makers to the e-commerce sites that move their goods, companies built on global supply chains took the biggest hit. Stocks with heavy exposure to Asia were especially hard-hit, as the new tariffs threatened the growth and profits of firms with factories in the region. Vietnam, central to many companies' production plans, faced a 46% tariff. Cambodia and Indonesia were also in the crosshairs, with tariff rates of 49% and 32%. These measures could significantly erode the competitiveness of goods produced in those regions. For example, reduced production volumes would negatively affect the sales growth of all companies benefiting from these manufacturing hubs.
Amazon is down 1.9% since the beginning of the year, and at $216.17 per share, it is trading 10.7% below its 52-week high of $242.06 from February 2025. Investors who bought $1,000 worth of Amazon’s shares 5 years ago would now be looking at an investment worth $1,389.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
