Amazon Stock Slides Below Key Level After Bond Sale. Debate About AI Spending Keeps Heating Up.

Core Viewpoint - Amazon's stock has experienced a significant pullback following a strong Q3 earnings report, with concerns about the high capital expenditures required for AI infrastructure impacting investor sentiment [1][3]. Group 1: Bond Sale and Market Context - Amazon conducted its first bond sale since 2022, issuing $15 billion in bonds to support business investments, fund future capital expenditures, and repay upcoming debt maturities [2]. - The broader market has been declining for four consecutive days, primarily due to fears regarding stock valuations in the AI sector [3]. - Analysts at Rothschild & Co Redburn downgraded Amazon's stock from buy to neutral, expressing skepticism about the potential of generative AI to drive growth similar to previous cloud computing trends [3]. Group 2: Capital Expenditure Concerns - AI-related infrastructure is noted to require six times the capital to generate the same value as traditional cloud services, raising concerns about the viability of AI projects [4]. - Despite these concerns, analysts at Needham maintain a bullish outlook on Amazon, citing the company's history of effectively managing large construction projects and maximizing return on invested capital (ROIC) [5][6]. Group 3: Stock Performance and Future Outlook - Amazon's stock fell over 3% to $223.75, marking a decline of 13% since reaching a record high of $258.60 on November 3, following positive news about a cloud-computing contract with OpenAI [6][7]. - The stock has fallen below its 50-day moving average for the first time since October 30, when it reported Q3 earnings that alleviated some market concerns about its AI positioning [7]. - Amazon is set to host its annual cloud customer conference, AWS Re:Invent, in early December, which may provide further insights into its cloud strategy [8].