• Amazon shares declined 1.8% amid ongoing underperformance versus Big Tech peers
  • Investor skepticism centers on the company's AI and cloud strategy and aggressive cost-cutting measures
  • The stock's forward P/E ratio sits near a decade low despite strong quarterly results

Amazon.com Inc. shares fell 1.8% in Tuesday trading, extending a pattern of relative underperformance against other "Magnificent 7" tech giants that has persisted over the past five years. The decline comes despite the company posting strong quarterly results, highlighting a growing disconnect between operational performance and market sentiment.

The e-commerce and cloud computing giant is facing heightened investor skepticism about its artificial intelligence strategy and slowing growth in its Amazon Web Services division, according to market analysts. This has occurred even as the company implements aggressive cost-cutting measures, including approximately 14,000 AI-driven layoffs, with management urging remaining staff to "lean in" on AI projects.

"There's a clear valuation disconnect happening with Amazon," said one portfolio manager who asked not to be named discussing specific positions. "The forward P/E is near decade lows, which suggests the market doesn't believe in their growth narrative, particularly around AI and cloud."

Recent technical analysis indicates bearish sentiment is building, with some forecasts projecting the stock could decline by approximately 6.7% by December 2025. The concerns are amplified by broader economic headwinds, including persistent high interest rates that have disproportionately impacted tech stocks. The Federal Reserve's stance against imminent rate cuts has contributed to market volatility, though Amazon's underperformance appears more company-specific.

Amazon has joined other tech giants in raising debt through US bond offerings to fund expansion and aggressive AI investments, a move that could impact credit metrics and financial strategy in the coming quarters. Company representatives did not immediately respond to requests for comment on Tuesday's stock movement.

Within the industry, attention is focused on whether Amazon can reaccelerate AWS growth and demonstrate tangible returns from its AI partnerships, including its significant investment in Anthropic. The competitive landscape in cloud computing and artificial intelligence has intensified, with Microsoft and Google making substantial inroads.

The broader tech sector has faced similar pressures, with several companies implementing large-scale layoffs to fund AI investments while navigating economic uncertainty. Amazon's centrality to retail, cloud, and logistics means these market movements have implications for thousands of suppliers, partners, and millions of consumers globally.

Correction: An earlier version of this article misstated the timeline for potential future layoffs. While concerns exist about additional workforce reductions, no specific layoffs have been announced for 2026.