Is Amazon.com Stock Underperforming the Dow?

AMZN +1.00%

Amazon.com, Inc. (AMZN) is a global technology and e-commerce behemoth, headquartered in Seattle, Washington. Today, the company operates across a dazzling range of businesses, cloud services via AWS, digital streaming, subscription services, advertising, physical retail, consumer electronics, and more. Its diversified growth model has placed it among the world’s most valuable public companies, with a market cap of $2.2 trillion, and it has a secure position in the Magnificent Seven group.

Companies worth $200 billion or more are generally described as “mega-cap stocks,” and AMZN definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the industry. Amazon maintains its leadership in the global market through its vast footprint and continued investments in advanced technologies.

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Despite its notable strength, AMZN has slipped 20.4% from its 52-week high of $258.60, achieved on Nov. 3. Over the past three months, the stock declined 9%, underperforming the Dow Jones Industrial Average’s ($DOWI) 5.8% gains during the same time frame.

Moreover, shares of Amazon declined 10.8% on a YTD basis and 3.2% over the past 52 weeks, underperforming DOWI’s YTD gains of 2.2% and 13.1% over the past year.

AMZN has largely traded above the 200-day moving average over the past year but dipped below the line lately. It is also trading below the 50-day moving average currently.

Amazon’s share price has fallen largely because investors are uneasy about its aggressive spending plans, especially the company’s announcement that it will spend around $200 billion on capital expenditures in 2026, a large portion of which is directed toward AI infrastructure and cloud expansion. This heavy investment has raised concerns about short-term profitability and free cash flow compression, leading shareholders to be cautious.

In the competitive space, eBay Inc. (EBAY) has taken the lead over Amazon, with a 2.4% decline on a YTD basis and a 21.5% gain over the past 52 weeks.

However, Wall Street analysts are bullish on AMZN’s prospects. The stock has a consensus “Strong Buy” rating from the 57 analysts covering it, and the mean price target of $284.76 suggests a notable potential upside of 38.7% from current price levels.

On the date of publication, Subhasree Kar did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com