--- title: "After Microsoft, Amazon becomes the second of the \"Seven Giants\" to fall into a bear market, the next one may be this company" type: "News" locale: "zh-HK" url: "https://longbridge.com/zh-HK/news/275957221.md" description: "Amazon's stock price has fallen over 20% from its recent high, becoming the second of the \"Seven Giants\" to enter a bear market after Microsoft. Concerns about excessive AI spending have intensified, leading investors to resist the aggressive investment plans of tech giants. Amazon's stock price has declined for nine consecutive trading days, marking the longest streak since 2006, and on Friday, the stock price fell below $200, down nearly 23% from its historical high. Analysts are worried that Amazon may become the first cloud giant with negative free cash flow" datetime: "2026-02-14T00:47:43.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/275957221.md) - [en](https://longbridge.com/en/news/275957221.md) - [zh-HK](https://longbridge.com/zh-HK/news/275957221.md) --- > 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/275957221.md) | [English](https://longbridge.com/en/news/275957221.md) # After Microsoft, Amazon becomes the second of the "Seven Giants" to fall into a bear market, the next one may be this company Amazon and Microsoft's stock prices have fallen over 20% from recent highs. This week, concerns about excessive AI spending continue to linger in the market. Investors are strongly resisting the aggressive AI investment plans of tech giants, leading to significant declines in the stock prices of the "Seven Giants." Amazon's stock price has been on a downward trend, with Wall Street worried that large-scale investments will make Amazon the first cloud business giant to report negative free cash flow by 2026. The first cloud giant with negative free cash flow? Since releasing its earnings report last week, Amazon's stock has fallen for nine consecutive trading days, marking the longest streak since 2006, officially entering a technical bear market, defined as a drop of 20% or more from a significant high. On Friday, the stock further fell below $200, down nearly 23% from its historical closing price of $254 on November 3. As a result, Amazon has become the second member of the "Seven Tech Giants" to enter a bear market, following Microsoft. Microsoft's stock entered a bear market on January 29, the day after the company reported that the growth rate of its Azure cloud business fell short of market expectations. As of this week's close, Microsoft's stock has dropped over 1/4 from its historical closing price of $542.07 on October 28. Amazon's massive AI investment plan has not gained investor approval. Despite investor concerns about the mismatch between Amazon's AI strategy and the growth pace of its cloud business emerging since last year, the company has doubled down on this direction. Among the four major cloud service giants, Amazon, Microsoft, Meta, and Google are expected to have a combined AI capital expenditure of $650 billion by 2026, with Amazon planning capital expenditures of $200 billion, the highest among global cloud service giants. This unexpected capital expenditure has greatly surprised investors and overshadowed the impressive 24% growth of Amazon Web Services (AWS) in the fourth quarter. Wall Street analysts are concerned that such large-scale investments will make Amazon the first cloud giant to report negative free cash flow. On Tuesday, investors received more details about Amazon's AI investments: semiconductor company Astera Labs (ALAB) disclosed in its earnings report that it has reached a multi-year agreement worth $6.5 billion to provide semiconductor connectivity solutions for the cloud service provider. Some analysts believe that the market's pessimism towards Amazon is overblown. Deutsche Bank analyst Lee Horowitz wrote in a report last week, "Amazon is not becoming more capital-intensive," but is instead investing in capital that will be used for cloud computing in the coming years to drive the digital transformation of the economy. Horowitz believes that the risk of under-investment for Amazon far outweighs that of over-investment. Even if investments exceed actual demand, the company can gradually digest this capacity over time. He set a target price of $290 for Amazon's stock. William Blair analyst Dylan Carden acknowledged the risks of Amazon increasing capital expenditures, stating that the stock price may remain under pressure until Amazon provides clearer signals of accelerated AWS revenue or profit improvement. However, he believes that the increased investment also reflects Amazon's "inherent advantages in transforming existing AWS infrastructure," meaning its capacity will come online faster than its peers Amazon also has heavyweight supporters on Wall Street. On Wednesday, Bill Ackman's Pershing Square Capital disclosed holdings in Amazon and Meta, which accounted for 13% and 10% of the fund's capital, respectively, as of the end of 2025. According to the Pershing Square 2026 Investor Report, the fund initiated its position in Amazon in April 2025 at a "very attractive valuation," when Amazon's stock price had reached a 52-week low of $161.38. "AWS is the leading cloud service provider in a highly concentrated market. We expect the company plans to double its data center capacity by 2027, which will be rapidly consumed by the computing power demands brought about by the expansion of AI inference business." Pressure Shifts to NVIDIA From recent market performance, the stock prices of tech giants have been hampered by concerns over excessive investment in AI. Mike Tracy, Vice President of Risk at Apex Fintech Solutions, stated that the recent sell-off highlights the increasing divergence within the "seven tech giants." First Financial reporters noted that market concerns over AI investments have persisted for months. After Meta raised its capital expenditure expectations during its third-quarter earnings call last October, its stock price plummeted and fell into a bear market on November 4. Meta's stock price rose from the bear market low of $589.15 on November 20 to a high of $738.31 on January 29, an increase of 25.3%, but then the company's stock price fell again, dropping nearly 19% from last August's peak as of Friday, once again approaching the bull-bear boundary, potentially becoming the next of the "seven giants" to fall into a bear market. Tracy noted that since the recent downturn, investors have begun to withdraw from OpenAI-related stocks associated with Microsoft, NVIDIA, and Oracle due to rising concerns over their cyclical financing transactions; instead, they prefer the ecosystem of Google and Broadcom. He added that Google's vertically integrated technology system has buffered some of the excessive investment concerns, allowing its stock price to avoid the most severe sell-off among tech stocks. As of the close, Google's stock price had fallen 10.3% from its historical closing price of $343.69 on February 2. "I believe Google's Tensor Processing Unit (TPU) self-sufficiency should warrant a valuation premium compared to other companies that may be impacted by issues in any part of the chain." In contrast, Amazon, Microsoft, and Meta have seen their stock prices hit harder, as investors are less confident that their AI investments will yield sufficient returns. For Amazon, significantly increased capital expenditures may reverse its free cash flow this year, meaning it would need to supplement funds through bond financing. However, despite the recent sharp decline, the current market conditions are still better than the last round of downturns—last April's tariff panic sell-off exacerbated the market crash, with all "seven giants" falling into a bear market. The Roundhill Seven Tech Giants ETF (MAGS) hit a low of $40.50 on April 8, 2025, down 30.5% from its peak of $58.24 on December 17, 2024. The ETF closed on Friday down 12% from its historical closing price of $69.06 on October 29 last year Tracy believes that the next key catalyst for the AI sector is NVIDIA's earnings report on February 25. 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