Key Points
Amazon shares fell about 4.6% Thursday without reporting any results of its own.
Alphabet raised its 2026 capital spending guidance to as high as $205 billion, and Tesla said its own spending will top $25 billion.
Amazon reports second-quarter results on July 30.
Amazon (NASDAQ: AMZN) fell about 4.6% on Thursday, and the company itself didn't report a thing. Most of the selling traces to other companies' earnings reports, though a new Senate inquiry into the company's marketplace added to the pressure. Alphabet bumped its 2026 capital spending plan to as high as $205 billion on Wednesday, and Tesla told investors its own capital spending will exceed $25 billion this year. Big tech fell broadly on the news, with all of the "Magnificent Seven" megacap stocks trading lower.
Amazon got caught in that downdraft for a specific reason. It has an AI (artificial intelligence) spending plan as big as any of them, at about $200 billion in expected capital expenditures for 2026. Alphabet's guidance raise arrived alongside negative free cash flow, and together they reminded investors that these budgets can still grow. Amazon reports its second-quarter results on July 30. The market spent Thursday pricing in the possibility that its number moves meaningfully higher, too.
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Image source: Amazon.
The concern isn't hypothetical. Amazon's free cash flow for the trailing 12 months had already fallen to $1.2 billion as of the first quarter. A year earlier, that figure was $25.9 billion.
But the other side of the ledger is growing, too. Amazon Web Services, the company's cloud computing business, grew revenue 28% year over year in the first quarter to $37.6 billion. That was its fastest growth in 15 quarters, and an acceleration from 24% the quarter before. The spending is buying acceleration, at least so far.
The stock now sits 16% under its 52-week high of $278.56. And it trades at about 29 times earnings, arguably a modest multiple next to several of its megacap peers.
What could override Thursday's worry on July 30 is straightforward: AWS growth accelerating even more, and a capital spending plan that doesn't lurch higher.
Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, and Tesla. The Motley Fool has a disclosure policy.