While this note focuses primarily on Amazon—following the company’s earnings release after yesterday’s market close and the subsequent 10% decline in after-hours trading—it is impossible to ignore the broader market dynamics that unfolded during the previous session, which was marked by a pronounced risk-off move across asset classes.
Commodities led the sell-off. Precious metals recorded sharp declines, with silver down 25% and gold falling 6%, although gold increasingly appears to be trading as a distinct asset class rather than moving in lockstep with broader risk sentiment. Bitcoin briefly approached the $60,000 level before retreating and is now down approximately 30% over the past week. Equities were not spared: all major U.S. indices closed near their session lows, posting losses of around 1.2%.
A key data point significantly worsened the macro backdrop during the U.S. morning session. Challenger Job Cuts, which track announced layoffs, surged to more than three times the prior reading, reaching levels last seen in 2009 during the Global Financial Crisis, at over 108,000. This was followed by weaker-than-expected releases for both JOLTS Job Openings and Initial Jobless Claims. Taken together, these indicators are beginning to paint a clearly deteriorating picture of the U.S. labor market.
The technology sell-off and renewed focus on layoffs are closely tied to Amazon’s current situation. Last month, the company announced an additional 16,000 job cuts, on top of the 14,000 announced in October. In just four months, Amazon has eliminated approximately 30,000 positions, almost entirely white-collar roles. After the market close, earnings failed to meet expectations: while revenues from both advertising and AWS exceeded forecasts, earnings per share came in below consensus. More notably, capital expenditure guidance stood out as a negative surprise, with management indicating spending of approximately $200 billion for the current year, compared with analyst expectations closer to $146 billion.
This reinforces a recurring theme weighing on Big Tech valuations. While the long-term potential of artificial intelligence is widely acknowledged, investors are increasingly questioning whether the scale of investment required to build and sustain these capabilities is economically sustainable at current levels.
Amazon shares, already down roughly 14% from their late-October highs—falling from $259 to $222.69 at yesterday’s close—are set to open near the $200 level based on after-hours price action, implying a further downside of around 10%. The most recent close sits at the lower boundary of the upward regression channel that has been in place since early 2023. Today’s expected opening places the stock close to what can be considered the final “line in the sand”: the long-term trendline connecting the early-2023 lows near $80 with the April 2025 trough around $165.
Overall, Amazon appears to be facing a material erosion of investor confidence amid a weakening labor market, rising cost pressures, and growing skepticism over the capital intensity of Big Tech’s AI-driven growth model.
