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Amazon.com Inc. (AMZN) stock stayed under pressure Friday after dropping nearly 5% on Thursday. The culprits are familiar by now: a massive AI spending plan, negative trailing free cash flow, and a macro backdrop that keeps reminding investors inflation has not fully packed its bags.
The stock has gained just 8% in 2026, a modest return for a company that is simultaneously building the future of cloud computing and getting dinged for paying for it.
Amazon's $220 billion 2026 capital spending plan remains the central investor concern. That is a lot of money going into AI infrastructure, and the market is not yet convinced the payoff arrives on a convenient schedule.
Trailing 12-month free cash flow stood at negative $7.6 billion, which adds a layer of scrutiny ahead of earnings. Higher Brent crude prices have also revived inflation and borrowing-cost worries, and that combination tends to weigh on technology stocks broadly.
Aptus Capital Advisors portfolio manager David Wagner is not among the worriers. He called Amazon his favorite stock and highlighted Amazon Web Services growth of nearly 40%.
He told CNBC that AWS incremental margins were approaching 40%, roughly 10 to 12 percentage points higher than a year earlier. That is the kind of detail that matters more than the headline capex number. Incremental margins tell you what each new dollar of revenue is actually worth, and right now those dollars are looking increasingly profitable.
Wagner said Amazon's earlier investments are beginning to create more opportunities to generate profits. He also argued that continued hyperscaler spending should support the broader AI ecosystem, which is a polite way of saying the arms race is not necessarily a bad thing for the people selling the arms.
Deepwater Asset Management Managing Partner Gene Munster offered a more nuanced take. He told CNBC that Amazon benefits from consumers already going directly to its platform and from having its own AI capabilities.
But he flagged a risk that is worth taking seriously. Broader personal agents such as Meta Platforms Inc. (META) Muse could challenge closed commerce ecosystems because they can search across retailers. In other words, if your AI assistant does the shopping, the destination matters less than the agent doing the searching.
Munster expects commerce to move increasingly toward interactions between AI agents, which could force Amazon and other retailers to adapt how they attract customers and participate in transactions. That is a structural shift, not a quarterly blip.
Amazon is scheduled to report earnings on Oct. 29, 2026. Analysts expect EPS of $1.96, up from $1.95 a year earlier, and revenue of $202.24 billion, up from $180.17 billion.
The stock carries a Buy consensus rating with an average price forecast of $335.62. Morgan Stanley maintained Overweight and raised its forecast to $350 on Oct. 19. Wells Fargo maintained Overweight but lowered its forecast to $329, while Cantor Fitzgerald maintained Overweight and cut its forecast to $310.
So the ratings are unanimous in direction even as the targets drift. That is the kind of split that happens when the long-term story stays intact but the near-term math gets messier.
AMZN Price Action: Amazon.com shares were down 0.25% at $249.75 during premarket trading on Friday, according to market data.
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