Amazon shares dip 4% on Senate probe ahead of earnings
Wall Street remains focused on AWS growth and AI capital expenditure plans despite regulatory uncertainty.
Amazon shares fell approximately 4% in a single trading session following reports that Senate investigators are examining allegations of Chinese influence over the company's third-party marketplace. The inquiry, led by Republican staff on the Senate Small Business Committee, centres on claims that intermediaries paid for favourable treatment of sellers, including reversing account suspensions. Bloomberg reported that investigators believe they have uncovered evidence suggesting some Amazon employees in China may have improperly influenced marketplace decisions involving third-party merchants.
The news emerged just days before Amazon’s second-quarter earnings report, scheduled for release on 30 July 2026 after market close. Because nearly 60% of products sold on Amazon come from third-party sellers, any weakness in marketplace oversight could eventually attract additional regulatory scrutiny. At this stage, the inquiry remains a fact-finding investigation rather than an enforcement action, though investors are concerned the probe could lead to tighter oversight, operational changes, or financial penalties if wrongdoing is established.
Despite the regulatory uncertainty, Wall Street remains focused on Amazon's strong performance in Amazon Web Services (AWS) and its significant investments in artificial intelligence infrastructure. AWS reported 28% year-over-year growth in the first quarter of 2026. Management has guided second-quarter revenue to be between $194 billion and $199 billion, with operating income forecast between $20 billion and $24 billion. Wall Street currently expects roughly $198 billion in revenue and approximately $1.82 billion in earnings per share for the upcoming quarter.
Amazon plans to spend approximately $200 billion on capital expenditures in 2026, primarily to expand AI infrastructure and data centres. The company’s in-house AI chip portfolio, including Graviton, Trainium, and Nitro, has surpassed a $20 billion annual revenue run rate. AWS continues to win major enterprise customers, including OpenAI, Visa, Salesforce, and the U.S. Air Force, highlighting the cloud division's expanding competitive position despite increasing near-term expenses.
Most analysts continue to recommend the stock, with Bank of America lifting its price target to $310, Goldman Sachs maintaining a $335 target, and KeyBanc holding a $325 target. According to Barchart data, AMZN stock currently holds a "Strong Buy" consensus rating based on roughly 57 analyst ratings, with an average price target near $315. The market reaction suggests investors are weighing the short-term headline risk against the company's underlying business fundamentals and long-term growth trajectory.
