Amazon (AMZN) stock had a rough month last month, falling as much as 11% in February. Amid a downturn in most of the market in February, AMZN’s magnitude made its stock drop more visible. The company reported financial results for 2024 on Feb. 6, which handily beat expectations. However, looking deeper into the numbers, investors found some tidbits that created concern over Amazon’s future.
In particular, some analysts and investors were concerned about a $100 billion expense coming soon. Amazon Inc (AMZN) is looking to continue its AI investments with an additional $100B investment incoming. According to Business Insider, the company’s efforts to create an internally developed AI model with sophisticated reasoning capabilities are approaching fruition. While the reasoning model is nearly complete, the development of proprietary AI agents remains in earlier stages.
While the investment is a step in the right direction for Amazon’s AI hopes, it left some investors concerned about how the investment could eat into AMZN profits. It is a steep expense for a still-developing industry. The company spent $48.1 billion and $77.7 billion on capital expenditures in 2023 and 2024, respectively. Spending $100 billion or more is a significant step up from there. There are cases of businesses spending so much on AI that it hurt profit margins, and that may be what investors are worried about.
Also Read: Amazon (AMZN) to Create AI Division as Stock Looks to Continue 16% Jump
Thursday saw Amazon and a host of other stocks drop significant value in their shares. Indeed, the company stock fell more than 4% as uncertainty and geopolitical tensions abound. Entering the weekend, AMZN stock was down 13% in the last 30 days. Further, Amazon’s management expects its full-year 2025 operating income to drop by $700 million compared to 2024. Thus, it may be valid for investors to be worried about AMZN’s performance in 2025 with this $100B AI investment factored in.
Although a host of companies have similar potential, they do not boast the same safety. Indeed, that is why some experts have started calling Amazon (AMZN) the best low-risk stock of 2025. Specifically, The stock currently holds a buy rating from 95% of the 74 analysts surveyed by CNN. Moreover, only 1% have issued a sell rating. Over the next 12 months, it features a $285 price target. AWS is expected to continue contributing to the companies, boosting operation income as well. It is a high-margin business compared to its retail sector. Its growth is not expected to stop any time soon, and if the AI investment brings profit, shares could surge towards the second half of 2025.