Amazon Stock: 7% Drop Threatens Key Support Level

Amazon's stock plummeted over 7% on Thursday, putting pressure on the critical $160 support level that analysts have identified as a crucial threshold. The significant decline came amid broader technology sector weakness but Amazon's drop was particularly notable as it has been fluctuating around this psychologically important mark for weeks. Technical indicators show the Relative Strength Index (RSI) has fallen into oversold territory, which could potentially signal an upcoming technical rebound, though it might also confirm the negative trend if the support level fails to hold. A decisive break below this key support could trigger further substantial losses, with some analysts projecting potential downside targets between $120-130.

Fundamental Challenges Amid AI Expansion

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While Amazon continues to advance its artificial intelligence initiatives with new features like the "Buy for Me" function for external websites and AI-powered "Recaps" for Kindle devices in the US, the company faces mounting challenges. Its AWS cloud division posted impressive 19% revenue growth, reaching $28.8 billion last quarter, but regulatory pressures are intensifying, with investigations by the European Union and potential antitrust lawsuits in the United States. Additionally, speculation around a potential TikTok acquisition presents both growth opportunities and significant operational risks that could impact the company's already strained profit margins in its core business.