Amazon shares retreated after its latest earnings report, mirroring the broader Magnificent Seven decline despite stronger-than-expected results, as investors assess high operating costs and uncertain timing for profit inflection in the second fiscal quarter.

The company is among hyperscalers planning to allocate part of the projected $650 billion capital expenditures in 2026 toward building AI data centers and developing models, raising concerns that heavy infrastructure outlays will weigh on cash flow and valuation.

Industry experts liken the AI build-out to the late-2000s cloud infrastructure expansion and forecast eventual market consolidation, but warn that prolonged spending could spark continued volatility until revenue from AI services ramps up.