Amazon (AMZN) shares fell sharply on July 23, dropping about 4% during regular trading after a 2% decline in pre-market, to around $240, leaving the stock roughly 14% below its 52-week high of $278.56. The drop was driven by three converging pieces of negative news: a U.S. Senate investigation into alleged Chinese influence over its marketplace, job cuts in its Artificial General Intelligence (AGI) division, and broader market weakness.
The most prominent headline was a probe by Republican staff on the Senate Small Business Committee. According to Bloomberg, investigators told at least one witness they had found “compelling evidence” of Amazon negligence related to Chinese influence on the platform. The committee is examining whether China has improperly exerted control over the marketplace, including allegations of an international bribery network involving Amazon employees in China accepting payments from merchants for administrative favors and competitive advantages.
This new scrutiny adds to Amazon’s existing regulatory challenges, which already include antitrust lawsuits and claims of deceptive practices. Independent seller Jack Nekhala shared recordings with committee researchers, detailing how intermediaries claimed contacts among Amazon employees in China could manipulate seller accounts for payment. Third-party sellers account for about 60% of products sold on Amazon, and many have long complained about arbitrary account suspensions and limited support, reportedly turning to such intermediaries.
Separately, Amazon confirmed on July 22 that it cut an undisclosed number of jobs in its AGI division, following a company-wide reduction of 16,000 positions in January. The layoffs affected teams within AGI Data Services and AGI Information, and the company said the move was to sharpen focus on customer-critical work. However, the timing raised investor concerns about how Amazon plans to monetize its massive AI infrastructure spending. A Bank for International Settlements-cited analysis noted that Amazon and four other major tech firms have accumulated $1.65 trillion in off-balance-sheet AI obligations, an eightfold increase in four years.
Despite the headwinds, Wall Street remained broadly bullish. BofA Securities reiterated a Buy rating with a $310 price target and raised its Q2 revenue estimate to $198.8 billion, citing 33% year-over-year AWS growth. Citi’s Ronald Josey and KeyBanc also maintained Buy ratings with price targets of $325 and $335, respectively. The average analyst target stands at $318.98, implying a potential upside of about 36% from current levels.
Insider selling has added another layer of caution: AMZN insiders sold $38.7 million worth of stock over the past three months with no reported buys. Amazon’s Q2 2026 earnings are scheduled for July 30, where the Senate probe, AI spending, and AWS trajectory will all be in focus.
