After trading near $260 last November, tech titan Amazon.com Inc (NASDAQ: AMZN) sits just above $200 in late February. The decline has pushed the stock firmly into bear market territory, with more than 20% shaved off its recent peak. Unfortunately for investors, what was already a choppy 2025 has turned into a fragile start to 2026.
The most recent catalyst behind the drop was the company’s Q4 earnings earlier this month.
A rare miss in earnings per share (EPS), combined with management's outline of roughly $200 billion in planned capital expenditures for AI and data center expansion, spooked investors.
In a market that has grown increasingly sensitive to spending discipline, the headline number alone was enough to shake confidence, especially given that the stock was already struggling to maintain momentum.
Yet beneath the price damage, the business itself does not appear to be deteriorating, which raises an important question for investors now that Amazon is officially in a bear market: Is this the start of a deeper downtrend, or simply a reset? Here’s how to be thinking about the setup for the rest of the quarter.
What's Behind the Drop?
The stock had already been drifting sideways for much of the past few months, struggling to maintain any upside momentum. That lack of conviction left it particularly vulnerable to any shift in investor sentiment towards risk. When the earnings missed alongside eye-watering spending plans, sellers seized control.
Importantly, the reaction seemed less about collapsing fundamentals and more about narrative fatigue. Investors are asking themselves whether such heavy AI investment can generate acceptable returns quickly enough, especially in a macro environment that is becoming less forgiving of aggressive capital allocation.
This is the tension defining the current setup. Amazon is investing heavily to stay ahead in AI and infrastructure, both key growth channels, but the market seems to want proof of returns rather than promises of dominance.
The Fundamentals Are Not Bearish
The thing is, despite the selloff, Amazon’s fundamentals remain solid. Revenue continues to grow, margins are expanding, and the AWS unit is accelerating faster than many expected. Those are not the hallmarks of a company in structural decline.
Even its valuation has reset meaningfully. The stock’s price-to-earnings (P/E) ratio, at just 28, now sits at one of its lowest readings in years. For a dominant business with diversified revenue streams across e-commerce, cloud, advertising, and subscriptions, that multiple isn’t stretched.
With that as the backdrop, this ongoing disconnect between price action and operating performance is striking. For those of us on the sidelines, it helps set the scene so this technical bear market is seen as an opportunity rather than a warning sign.
Analysts Are Not Throwing in the Towel
Backing up this thesis is the consistent bullish analyst positioning, despite the bear-market label, as support from Wall Street remains strong.
The likes of Daiwa Securities Group and New Street Research, to name just two of many, have both reiterated Buy ratings on Amazon stock this month, with price targets stretching toward $285.
From the stock’s current levels near $200, that implies nearly 40% upside potential. That degree of conviction would be hard to justify if revenue were contracting or margins collapsing.
Instead, the bullish stance reflects confidence in Amazon’s long-term strategic positioning, outweighing any near-term negative sentiment on shares.
What the Chart Is Saying
Technically, there are also signs that shares are starting to form a bottom around $200. This is the recent low where the bulls intervened in mid-February, preventing a further breakdown. That area now becomes critical support for the remainder of Q1.
If the stock can hold above $200 and begin setting some higher lows, the bear market designation may prove short-lived. In that scenario, investors could interpret the pullback as a reset rather than the beginning of a prolonged downtrend. However, if $200 fails, things could get grim pretty quickly, with last year’s low around $170 likely coming into view.
What to Expect Through the Rest of Q1
Unsurprisingly for Amazon, the most likely near-term path is continued volatility. Investors remain uneasy about the stock’s inability to muster any meaningful rally, while any further headlines around spending could trigger sharp swings.
At the same time, the underlying business momentum provides a floor. AWS's strength and expanding margins offer fundamental support that other stocks in bear markets lack. That dynamic suggests Amazon is in a consolidation period rather than mid-way through a multi-year collapse.
For the remainder of Q1, watch the $200 level closely. As long as shares can remain above it, the odds of a recovery back toward the mid-$200s remain favorable. Failure to hold that line, however, would invite renewed selling pressure and likely extend the bear phase.
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
The article "Amazon’s in a Bear Market—What to Expect for the Rest of Q1" first appeared on MarketBeat.
