Cloud Competition Weighs on Amazon’s Stock Performance

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Amazon shares concluded the first trading week of 2026 at $226.50, marking a decline of 1.87%. Investor sentiment appeared cautious, as evidenced by a trading volume of 51.1 million shares—significantly above the average of 33 million. This heightened activity suggests a reassessment of positions, driven by news that Brookfield Asset Management is launching a $10 billion offensive into the cloud computing sector, posing a potential challenge to Amazon Web Services (AWS).

Despite the stock's weak performance, three major financial institutions chose the same day to raise their price targets, expressing a longer-term bullish outlook.
* Oppenheimer increased its target to $305, implying an upside of approximately 35%.
* BMO Capital Markets raised its target to $304, citing growth in AWS and AI workloads.
* Wells Fargo set a new target of $295.

The analysts' optimism centers on Amazon's integrated ecosystem, which includes proprietary AI chips (Trainium and Inferentia), the Bedrock software platform, and a highly profitable advertising division. They argue this creates a defensive moat that pure infrastructure providers cannot easily breach. The immediate market reaction, however, indicates investors are awaiting concrete proof before fully endorsing this view.

Brookfield's "Radiant" Threatens the Cloud Stack

The source of market concern is Brookfield's planned "Radiant" cloud service. This new model aims to rent AI chips and raw computing capacity directly to developers, targeting the foundational layers of the cloud stack. By offering basic computing power at a lower cost than established players, it challenges a key historical advantage for AWS: its end-to-end model that provides integrated infrastructure, software, and services.

Should investors sell immediately? Or is it worth buying Amazon?

The fear among shareholders is that well-capitalized infrastructure specialists like Brookfield could commoditize base-level compute, thereby pressuring AWS margins. In response, Amazon would likely need to invest even more to differentiate through higher-value services—a difficult prospect given the already massive rise in data center and GPU costs.

Pressure Mounts for Upcoming Earnings

This sluggish start to the year follows a mixed 2025, during which Amazon's stock gained only 6%, substantially underperforming the S&P 500's 18% advance. While AWS growth has re-accelerated to around 20%, the substantial investments required to expand AI infrastructure are noticeably impacting free cash flow.

All eyes are now on the Q4 earnings report due at the end of January. Amazon must demonstrate that its massive capital expenditures are translating into improved operating margins, particularly within AWS. The company's high-margin advertising business remains crucial for funding these infrastructure investments. Until such financial evidence materializes, the equity is expected to remain volatile. From a technical perspective, the $220 level represents a key support zone, while a sustained breakout above $230 could signal the beginning of a recovery.