Amazon Shares Face Pre-Market Pressure Ahead of Q2 Earnings

Key Moments

Amazon.com, Inc. shares fell 2.0% in pre-market trading to $240 after investors reacted to a U.S. Senate probe into alleged Chinese influence on its marketplace.
Investor concerns also grew after Amazon cut jobs in its Artificial General Intelligence unit and reports highlighted $1.65 trillion in AI-related obligations across major tech firms.
BofA Securities kept its Buy rating and $310 price target while raising Q2 revenue and AWS growth forecasts.

Senate Probe Raises Regulatory and Reputational Risks

Amazon.com, Inc. (NASDAQ: AMZN) traded lower before the market opened, falling 2.0% to $240. The move followed news of a U.S. Senate investigation into possible Chinese influence on its e-commerce platform.

The Senate Small Business Committee’s Republican staff is leading the review. According to reports, investigators told at least one witness they found “compelling evidence” of possible issues. As a result, investors are watching for potential regulatory and reputational risks.

The timing also drew attention because Amazon will release its Q2 2026 earnings results on July 30. Therefore, the investigation adds another risk factor ahead of a closely followed report.

AI Division Layoffs Raise Strategy Questions

Market pressure increased after Amazon reduced roles in its Artificial General Intelligence unit on July 22. These cuts follow smaller workforce reductions after the company eliminated 16,000 positions in January.

Amazon said the changes would help focus resources on key customer initiatives. However, investors questioned whether the company’s AI strategy remains clear as spending on infrastructure continues to rise.

The layoffs come at a time when markets are closely watching whether major technology firms can turn large AI investments into stronger returns.

Concerns Over Off-Balance-Sheet AI Obligations

Concerns about Big Tech spending also increased after an analysis cited by the Bank for International Settlements highlighted large AI-related commitments. The report stated that Amazon and four other major technology companies hold $1.65 trillion in off-balance-sheet AI obligations.

This figure is higher than their combined disclosed debt. Moreover, these commitments have grown eightfold over the past four years.

As a result, investors are questioning whether AI spending could exceed free cash flow by 2027. This has created more caution around technology sector valuations and capital plans.

AI-Related Metric	Detail
Off-balance-sheet AI obligations (Amazon and four peers)	$1.65 trillion
Comparison to disclosed debt	Higher than combined disclosed debt
Growth over four years	Increased eightfold

Analyst Support from BofA Securities

Despite recent concerns, BofA Securities remained positive on Amazon before earnings. The firm maintained its Buy rating and $310 price target.

Additionally, BofA raised its Q2 revenue estimate to $198.8 billion. It also increased its year-over-year AWS growth forecast to 33%.

These forecasts provided some support for investors. However, concerns around regulation and AI spending continued to weigh on sentiment.

BofA Securities Forecasts for Amazon	Value
Rating	Buy
Price target	$310
Q2 revenue estimate	$198.8 billion
AWS growth forecast (year-over-year)	33%

Broader Market Weakness Weighs on Sentiment

The broader U.S. market also pressured Amazon shares. The S&P 500 fell 0.45%, while the Dow Jones Industrial Average declined 0.44%. Meanwhile, the NASDAQ dropped 0.65% as investors reduced risk exposure.

Index	Move
S&P 500	-0.45%
Dow Jones	-0.44%
NASDAQ	-0.65%

Positioning Ahead of Earnings

The Senate investigation, AI layoffs, and concerns over rising obligations created a difficult backdrop for Amazon shares before the market opened.

Meanwhile, Q2 earnings are only one week away. The stock is also trading about 14% below its 52-week high of $278.56. Therefore, some investors appear to be reducing exposure before the earnings call.