Amazon Shares Plunge 7% as Jassy's AI Defense Fails to Calm Investor Growth Fears

Amazon shares fell 7% in after-hours trading following disappointing profit guidance and Jassy's responses to analyst questions about AWS's competitive position in the AI race. While AWS reported 17% revenue growth, it lags behind the faster growth rates of Microsoft and Google's cloud divisions.

Jassy defended AWS by highlighting its larger revenue base, superior security and functionality, and market share leadership. He also pointed to AWS's lower-cost Trainium AI chip and new developer tools as competitive advantages.

Analysts, however, expressed concern that competitors are gaining momentum. Jassy acknowledged capacity constraints in electricity, chips, and servers, particularly power, which he expects to take several quarters to resolve.

Despite these challenges, AWS's cloud market share remained stable at 30% in the second quarter.