Amazon Shares Halt Slide as AI Ambitions Clash with Cash Flow Concerns

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After enduring its longest losing streak since 2006, Amazon's stock price finally found its footing. The rebound comes at a pivotal moment, as investor sentiment remains divided between excitement over the company's artificial intelligence potential and anxiety over its massive planned capital expenditures.

Recent 13F filings for the fourth quarter of 2025 revealed starkly different strategies among major institutional investors. Berkshire Hathaway, under the leadership of Warren Buffett who had stepped back from day-to-day operations by the end of 2025, slashed its Amazon holding by 77%. Following this reduction, the conglomerate retained approximately 2.28 million shares.

In a contrasting move, Bill Ackman's Pershing Square Capital Management significantly expanded its stake. The hedge fund boosted its position in Amazon by 65% during the same quarter, elevating the e-commerce and cloud giant to a top holding alongside other members of the "Magnificent Seven" cohort.

Analyst Confidence Amidst Spending Fears

Providing a key catalyst for the recent stabilization, Morgan Stanley analyst Brian Nowak reaffirmed his Overweight rating on Amazon. He maintained a price target of $300 per share, which the bank states represents an upside potential of roughly 50% from current levels. Nowak's central argument is that the market is underestimating Amazon's capacity to emerge as a dominant force in generative AI, a strength he sees extending across both its AWS cloud division and its core commerce operations.

This bullish outlook persists despite ongoing investor unease sparked by management's capital expenditure guidance in early February. The company projected 2026 Capex of $200 billion, a near 60% increase over the prior year, with the majority earmarked for AI infrastructure. This announcement was a primary driver behind the stock's recent 18% decline, fueling concerns over near-term free cash flow pressure.

Operational Momentum Provides Support

Operationally, Amazon is demonstrating robust performance. Its AWS cloud unit reported a notable acceleration, with fourth-quarter 2025 revenue growth reaching 24% year-over-year. This marks the division's fastest growth rate in 13 quarters. Morgan Stanley suggests further acceleration is possible, projecting that AWS growth could eventually exceed 30%, fueled by aggressive data center capacity expansion.

Within the retail segment, AI integrations are already yielding measurable results. The generative AI shopping assistant, "Rufus," is credited with supporting Gross Merchandise Value (GMV) growth by 140 basis points by the end of 2025.

Key Data Points:
- Morgan Stanley Price Target: $300 (confirmed)
- Projected 2026 Capex: $200 billion
- AWS Q4 2025 Growth: +24% (year-over-year)
- Berkshire Hathaway: Reduced stake by 77% in Q4 2025
- Pershing Square: Increased stake by 65% in Q4 2025

The equity, which ended a nine-session decline yesterday, is now consolidating around the $205 level. Its trajectory appears caught between the long-term promise of AI and the immediate, tangible question of how deeply these historic investments will weigh on cash flow in the short term.