Amazon’s stock plummeted by over 8% on Friday after the company revealed that online sales growth in the second quarter had slowed, and that consumers were increasingly seeking less expensive options, according to Reuters. The announcement aligns with current consumer behavior trends favoring value, as Walmart prepares to release its quarterly results later this month. During a call to discuss the company’s profits, Amazon CEO Andy Jassy noted that consumers were negotiating prices more frequently.
Before the market opened, Amazon’s shares were trading around $169. If the decline persists, the company’s market value could drop by approximately $157 billion. MoffettNathanson analyst Michael Morton remarked, “Consumer spending trends affecting other retailers have now impacted Amazon’s financial performance.” Sales through Amazon’s online store grew by 5% to $55.4 billion in the second quarter, a slowdown from the 7% increase in the first quarter.
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Despite this, the company’s cloud computing sales and quarterly earnings surpassed analysts’ expectations. Amazon Web Services (AWS) reported a 19% increase in revenue to $26.3 billion, exceeding forecasts, following Microsoft’s Azure’s recent miss on market estimates and raising new concerns about Big Tech’s AI investments.
Amazon is advancing in AI, developing its own “big language models” that respond rapidly to complex queries, positioning itself competitively against Microsoft, which partners with OpenAI, and Google. For comparison, Alphabet’s and Microsoft’s forward price-to-earnings ratios for the next 12 months are 20.46 and 30.88, respectively, while Amazon’s ratio stands at 33.92.
