The December quarter earnings season for the “Magnificent 7” tech stocks is over, with Meta Platforms seeing gains while Microsoft and Amazon plunged due to concerns over AI capex. Amazon’s stock fell to $200 after mixed earnings, with analysts lowering target prices. The company forecast a 2026 capex of $200 billion, causing market unease.

Despite beating revenue estimates, Amazon’s post-earnings crash was due to a $200 billion capex budget for 2026, well above expectations. The company defended the increase, citing growth opportunities in AI, chips, and more. However, the market was unforgiving, sending the stock downward.

Amazon emphasized strong growth in AWS and other sectors during its earnings call, addressing concerns over capex. Management avoided setting a free cash flow target, focusing on aggressive investments. Despite efforts to justify capex growth, the market reacted negatively to Amazon’s plans.

The post-earnings slump in Amazon’s stock presents a buying opportunity for some investors. Concerns over AI competition in digital ads are downplayed, with expectations of growth in Prime ads. Despite rising capex and negative 2026 free cash flows, Amazon’s long-term investments are seen as beneficial.

Amazon’s forward P/E multiple has fallen to 28.2x, making it an attractive buy despite reduced free cash flow. The company’s focus on long-term growth through investments in AI and other areas is expected to pay off. Investors see potential for Amazon’s stock to rise towards $300 in the next two years.

Investors view Amazon’s post-earnings dip as a chance to buy into the stock at a discounted valuation. With expectations of AI investments bearing fruit and continued business growth, Amazon is seen as a quality investment. The company’s current position and future prospects make it an appealing choice for long-term growth.

Read more at Yahoo Finance: Can Amazon Stock Defy the Bears and Rise to $300?