Amazon (AMZN) shares have come under significant pressure following the company’s weak earnings report on 5 February, as shown by the chart:
→ Revenue: $213.4 bn (expected: $211.4 bn)
→ EPS: $1.95 (expected: $1.97)
The report was weighed down by Amazon’s announcement that it plans to spend $200 bn on capital projects in 2026, largely targeting AI, data centres, and chip production. This represents a roughly 60% increase from last year and far exceeds analysts’ projections of around $146 bn.
Investors may be concerned that the escalating AI competition with Microsoft and Google could prove costly, with monetisation likely taking years and success remaining uncertain. Following the earnings release, two broad bearish gaps formed below the $232 and $220 levels, signalling heightened downside pressure.
Amazon (AMZN) Technical Outlook
Since June last year, a thick trendline had acted as a reliable support, considered a favourable entry point for AMZN shares. However, this line has now been decisively broken.
Constructing a channel using this trendline as the median and the previous high as the upper boundary, the line separating the channel’s lower two quarters (QL) currently functions as short-term support.
The gap zones are likely to act as resistance, and negative market sentiment is expected to continue applying pressure on the stock. If bearish momentum persists, the QL line and the key psychological $200 level could be breached, raising concerns further.
Under this scenario, the share price could drop towards the lower boundary of the channel, around $188.
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