Increased Scrutiny Expected for AI-Connected Stocks Following Amazon’s Results

Amazon.com Inc. is gearing up for a pivotal moment as it prepares to release its earnings report on Tuesday, which will serve as a litmus test for investors’ appetite for heavy artificial intelligence spending.

In the wake of Meta Platforms Inc.’s disappointing earnings last week, which led to a massive selloff in tech stocks, investors are closely watching how companies are monetizing AI. While Alphabet Inc. and Microsoft Corp. were able to ease concerns with their results, all eyes are now on Amazon.

The focus will be on Amazon’s web services segment, particularly its use of generative AI. Options traders are expecting a significant move in the stock price following the earnings report, indicating high levels of anticipation and uncertainty.

Amazon has heavily invested in generative AI cloud services, believing it can generate billions in revenue in the coming years. However, the key to how well its report is received will be in how effectively the company communicates its outlook, especially in light of recent market volatility and uncertainty around interest rates.

Investors are also eagerly awaiting any announcements regarding potential dividends or buybacks from Amazon, as the company is the only major tech player that currently does not offer a dividend. Analysts remain bullish on Amazon, with no sell recommendations and an average price target suggesting significant upside potential.

However, the pressure is on for Amazon to meet expectations and provide solid commentary, as failure to do so could result in a similar fate to Meta’s recent earnings rout. The stakes are high, and Amazon’s performance will be closely scrutinized by investors looking for reassurance in the volatile market environment.