Why Amazon.com Stock May Drop Soon

Amazon.com (AMZN) has stumbled before. Its stock has plunged more than 30% within a span of less than 2 months on 3 occasions in recent years, wiping out billions in market value, and erasing massive gains in a single correction. If history is any guide, AMZN stock isn’t immune to sudden, sharp declines.

While Amazon’s stock has soared over the past year, touching new highs on robust cloud and AI innovation, its recent volatility suggests the high-flying valuation faces critical tests. Intensifying competition across e-commerce and cloud services, alongside massive capital outlays for AI infrastructure, could temper future growth. This aggressive investment, while strategic, also exposes the tech giant to macroeconomic shifts and escalating regulatory scrutiny, hinting at potential vulnerabilities in its seemingly unshakeable trajectory.

What Could Send The Stock Crashing?

• Regulatory Risks: EU probes in Nov 2025 could designate AWS a gatekeeper under DMA, risking large fines. Amazon paid a $2.5B FTC settlement over Prime signup practices, signaling continued scrutiny.
• E-comm Rivalry: Temu and Shein gain significant US market share (57%, 43% of consumers, respectively) via ultra-low-cost models, challenging Amazon’s retail dominance. Amazon Haul launched Nov 2024 struggles for traction. Tariffs may help.
• AWS Growth Pressure: AWS growth decelerated to 17.5% YoY in Q2 2025 as Azure ($29.9B Q2 rev) and Google Cloud gain share. EU regulatory probes could impose DMA gatekeeper rules, increasing compliance costs. OpenAI deal is a recent win.

What’s The Worst That Could Happen?

When thinking about risk, it helps to look at how Amazon has reacted in tough market times. It plunged nearly 94% during the Dot-Com Bubble, which is massive. The Global Financial Crisis hit it for about 65%, and the Inflation Shock during 2022 wasn’t kind either, with a drop of over 56%. Even the less severe events, like the 2018 correction and the Covid selloff, still knocked it down by around 34% and 23%, respectively. So, even with all the positives, Amazon’s history shows it can still take big hits when the market turns south.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read AMZN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

Is Risk Showing Up In The Company’s Financials Yet?

Let’s take a look at fundamentals

• Revenue Growth: 10.9% LTM and 11.3% last 3-year average.
• Cash Generation: Nearly 2.0% free cash flow margin and 11.4% operating margin LTM.
• Valuation: Amazon.com stock trades at a P/E multiple of 34.5

*LTM: Last Twelve Months

If you want more details, read Buy or Sell AMZN Stock.

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