Amazon stock drops 3.4% as investors weigh AI spending ahead of Q3 earnings

Amazon's stock fell 3.4% in morning trading as investors took a cautious stance ahead of the company's Q3 2026 earnings report, scheduled for release after today's market close. The primary pressure stems from sector-wide concerns about AI capital expenditures and returns, triggered by Alphabet's report of negative free cash flow for a second consecutive quarter due to rising AI infrastructure costs. Amazon raised its 2026 capital expenditure forecast to $220 billion, which has already pushed its running free cash flow into negative territory, while analysts at Truist and Cantor Fitzgerald expressed caution. Amazon's stock hit a session low of $241.24, well below its 52-week high of $287.20, as the Nasdaq Composite led market declines. Investors await tonight's AWS growth figures and forward guidance to determine if the AI investment cycle is yielding returns, while Oppenheimer noted Walmart's strengthened membership program poses competitive pressure on Amazon Prime.