Amazon.com Inc's annual Prime Day isn't the catalyst it once used to be

Amazon.com Inc.’s annual Prime Day shows that e-commerce isn’t the driver it once was for the stock, as investor focus shifts to the company’s faster-growing and profitable cloud-computing unit.

In the past four years, the stock has fallen in the week of the two-day sale in which the retail giant discounts swathes of items. The first four years saw Amazon shares average a gain of more than 2 per cent in the week of the event, according to Bloomberg. 

The focus on cloud computing has only increased as Amazon Web Services grew into the company’s main source of operating income, amid greater investor scrutiny over who stands to benefit most from the rollout of artificial intelligence applications.

“Most people invest in Amazon for both” e-commerce and AWS, Eric Clark, portfolio manager at Accuvest Global Advisors, said in an interview. But with “AI being part of the conversation kind of almost every minute of every day, it’s clearly the AWS opportunity and the potential AI implications” that’s proving to be more attractive. 

Prime Day, which begins on Tuesday, is likely to generate about $5 billion of incremental revenue this year, according to JPMorgan analyst Doug Anmuth. While that would be up 13 per cent from last year, the pace of growth has slowed steadily each year since a 30 per cent increase in 2020, Anmuth wrote in a recent research note.Amazon.com Inc’s annual Prime Day isn’t the catalyst it once used to be