Amazon slides 4% ahead of Prime Week as Evercore calls it a buy

Amazon.com Inc. shares fell 4.08% to $244.39 on Monday, sliding ahead of the company's biggest sales week of the year.

The pullback comes after Evercore ISI's Mark Mahaney named Amazon a top pick among megacap tech stocks, arguing the shares trade at a three-year trough multiple that fits his "dislocated high-quality" framework. "Every Mag 7 name has trailed the S&P 500 over the past month," Mahaney, the firm's head of Internet research, said on CNBC's "Closing Bell Overtime" on June 18.

Amazon's Q1 2026 results showed no signs of a slowing business. AWS revenue grew 28% to $37.59 billion, the fastest pace in 15 quarters, with an operating margin of 37.7%. Chief Executive Officer Andy Jassy said the chips business topped a $20 billion annual run rate, growing triple digits year over year, while advertising crossed $70 billion in trailing 12-month revenue.

The concern centers on capital spending. Amazon guided to roughly $200 billion in 2026 capital expenditures, compressing near-term free cash flow. Prediction markets on Polymarket assign an 86.5% probability that 2026 CapEx exceeds $200 billion. Mahaney argues that chips are lasting longer than expected, extending the useful life of existing infrastructure, and that CapEx peaking and free cash flow turning positive are the catalysts that could reverse the stock's slide.

The stock now trades at $244.39, well below the 24/7 Wall St. price prediction model target of $324 and the sell-side consensus of $312.99. Of the 66 analysts covering Amazon, 15 rate it a strong buy, 47 a buy, and four a hold, with zero sell ratings. The implied upside to the consensus target is roughly 28%.

Amazon's decline mirrors a broader rotation out of megacap tech. Every member of the Magnificent Seven has trailed the S&P 500 over the past month, with the SPDR S&P 500 ETF Trust up 1.77% while Amazon dropped 5.76%. Goldman Sachs has flagged fresh short positions in the group funding other hedge fund bets, Mahaney said, adding that a "capital suck" from upcoming IPOs has pulled dollars from incumbent positions.

Mahaney's thesis hinges on one inflection point: whether capital expenditure intensity peaks and free cash flow revisions turn positive. If that happens, the stock could re-rate quickly. Investors will watch Amazon's next earnings report for updated CapEx guidance and any signs that the AI infrastructure buildout is starting to generate returns.

This article is for informational purposes only and does not constitute investment advice.