BMO Sees $310 Despite AI Sell-Off & Downgrade

Amazon’s stock is sliding after an earnings beat that should have been a victory lap but instead turned into a referendum on a massive new AI spending cycle.

AMZN tumbles as $200B AI bet spooks Wall Street

Amazon shares trade around 222.69 dollars, down more than 4% on the day and roughly double the average daily volume, underscoring how intensely traders are repositioning around the name. The sell-off accelerated after management outlined plans to pour about 200 billion dollars into capital expenditures this year, primarily to supercharge AWS data centers, AI chips, robotics, and satellite infrastructure.

That figure puts Amazon at the front of Big Tech’s capex arms race and well ahead of already-elevated spending plans from Meta, Microsoft, and Alphabet.

The aggressive guidance overshadowed an otherwise solid holiday quarter, with net sales of about 213.4 billion dollars modestly beating Wall Street estimates and operating income landing roughly in line with consensus. Earnings per share came in around 1.95 dollars, essentially matching expectations and confirming that Amazon’s post-pandemic margin rebuild remains on track.

Yet the market reaction shows investors are far more focused on cash outlays than on backward-looking profitability, especially with the stock still not far from its 52‑week high of 258.60 dollars.

However, at least one major brokerage, DA Davidson, responded by downgrading the stock to Neutral and cutting its price target to 175 dollars, signaling growing skepticism that all of this spend will translate into shareholder value on an acceptable time horizon.

Consensus points to $287 target

Wall Street’s average 12-month price target stands at 286.80 dollars from 45 analysts, signaling 28.79% upside from current levels, with a “Strong Buy” consensus (96% Buy/Strong Buy ratings). High-end forecasts reach 340-370 dollars by year-end 2026, driven by AWS acceleration, AI chip demand (Trainium), ad revenue growth, and free cash flow doubling. Low targets hover at 195-230 dollars from cautious voices worried about capex dilution and AWS margins.

Recent updates post-Q4 earnings: BMO Capital at 310 dollars (Outperform, AWS focus), Citizens JMP at 315 dollars (Buy), UBS at 311 dollars (Buy), while DA Davidson sits at Neutral/175 dollars on spending risks. Evercore ISI’s Mark Mahaney eyes 50% upside potential, calling Amazon a “high-quality compounder” with 25% EPS CAGR through 2027.

2026 projections and catalysts

FY2026 revenue forecasts hit 812 billion dollars (+13% YoY), EPS at 8.16 dollars (+12%), fueled by 20%+ AWS growth and AI infrastructure dominance. Q1 revenue expected at 177.91 billion dollars, with capex enabling robotics, satellites, and faster Prime delivery to boost margins long-term. Risks include capex overruns if AI demand softens, but bulls argue this positions Amazon ahead in the hyperscaler race versus MSFT/GOOGL.

What the earnings call means for AMZN’s next move

For now, the market is treating Amazon as a high-beta AI infrastructure play rather than a defensive e‑commerce compounder, which explains why the stock dropped over 10% at one point despite revenue growth and steady margins. The combination of an 11%-plus operating margin, a price‑to‑earnings multiple in the low 30s, and a market cap north of 2.3 trillion dollars means any hint of free‑cash‑flow compression gets punished quickly.

Short‑term oriented traders are now testing how much capex pain they are willing to tolerate before rotating into hyperscalers with less aggressive spending trajectories.

At the same time, the call reinforced Amazon’s status as a central winner in AI infrastructure if management executes: AWS growth is re‑accelerating, logistics efficiency is improving, and experiments like 30‑minute delivery are designed to lock in Prime loyalty and third‑party sellers.

With the stock still comfortably above its 52‑week low of 161.38 dollars but well off recent highs, AMZN now trades as a high‑stakes bet on whether this 200‑billion‑dollar capex cycle becomes the foundation of the next leg of growth—or an expensive misstep in the AI gold rush.