This article first appeared on GuruFocus.
Amazon.com (NASDAQ:AMZN), the e-commerce and cloud-computing giant, dropped approximately 2.1% to $260.90 Monday as the 10-year Treasury yield charged toward 4.75%. Reuters reported that renewed inflation fears pushed the market-implied probability of a September Federal Reserve rate increase above 60%. Bond yields went up. Amazon went down. The reason is sitting inside its AI spending bill.
Amazon’s cash engine is roaring, but its capital expenditures are roaring louder. The company’s second-quarter filing showed trailing operating cash flow jumping 33% to $161.4 billion, while free cash flow flipped from an $18.2 billion inflow to a $7.6 billion outflow. That ugly reversal followed a $66.1 billion increase in property and equipment purchases as Amazon poured money into AI infrastructure.
Amazon Drops Over 2% as a 4.75% Yield Reprices Its AI Buildout · us.finance.gurufocus
The chart adds another pressure point: Amazon’s $260.90 share price sits 5.55% above its $247.18 GF Value, leaving little room for an AI payoff that takes longer than expected. AWS may eventually turn those servers into a cash machine. For now, investors see a $25.8 billion free-cash-flow swing and a rising risk-free rate. When money gets more expensive, patience gets cheaper.