Why Amazon Stock Lost 12% in June

Amazon shares dropped 12% in June as the e-commerce giant's $200 billion annual capital expenditure on AI infrastructure spooked investors despite strong underlying cloud performance. AWS delivered 28% year-over-year sales growth with robust uptake of its AI tools, but the market is questioning whether the company can generate adequate returns on its massive AI spending.

The selloff reflects mounting concern over AI infrastructure oversupply and intensifying competition that could compress margins and extend payback periods. Management maintains confidence in the long-term return profile of these investments, but the sheer scale of the capex commitment—$200 billion annually—represents a significant drag on near-term free cash flow and has triggered multiple compression in the stock.

The disconnect between AWS's operational strength and the stock's performance highlights investor unease about capital allocation in the current AI arms race. While 28% growth in the cloud division would typically support the stock, the market is demanding clearer visibility into how Amazon will monetize its AI infrastructure buildout.