Amazon slumps as tech selloff worsens

The dour outlook worsened this week’s tech selloff amid fears of a looming recession, weighing on shares of Meta Platforms Inc, Alphabet Inc and Microsoft Corp.

Amazon’s shares, which were down 12.8% at $96.77, were trading at their lowest since March 2020.

However, Apple Inc shone bright amid a crowd of dimming lights in the Big Tech space, as the iPhone maker said it expects holiday-quarter revenue to grow by under 8%, compared with estimates of 3%.

Many view the megacap companies as bellwethers for how corporate America is faring during a year in which inflation has soared, pushing the U.S. Federal Reserve to enact a series of jumbo-sized rate hikes that have bruised markets.

Analysts fear macroeconomic factors, including a strong dollar, will continue to hit Amazon in the near term, however, over a longer period of time, the retailer should be able to bounce back.

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“Despite accelerating revenues, Amazon has been cut down to size by the market after missing expectations. Efficiency has yet to return to the e-commerce business,” Ben Barringer, equity research analyst at Quilter Cheviot, said.

While the cloud services segment has been one of high and sustained growth for tech companies, indications for Amazon, Microsoft and Intel Corp this week point to lower investments as costs rise.

Intel’s shares rose about 5% premarket after the chipmaker said its cost-reduction plan includes layoffs and is expected to reduce costs by $3 billion next year.

However, analysts are cautious of how the company plans to reduce costs.

Cost reductions are necessary, but Intel needs to focus on cutting spending in the right places and keep research and development investments high, Glenn O’Donnell, research director at Forrester, said.