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The American e-commerce giant is increasingly less associated with an online store and more often viewed in a one-dimensional way through the lens of its new label as part of the so-called “hyperscalers.”
Doubts about both the company’s AI-driven growth strategy and the quality of its implementation have been discussed for a long time. This is being covered more and more loudly in industry media: both Reuters and the Financial Times report that the company’s AI-based programming tools and methodology are performing not better and better, but worse and worse.
Only recently has this started to show up in valuations. In the first half of February, the shares fell by as much as 15%. What changed shareholders’ sentiment? The market realized that the “hyper” in “hyperscalers” also means “hyper-CAPEX,” which requires “hyper-FCF”, cash flow the company doesn’t have and won’t have if current trends persist.
But this is the beginning, not the end, of the company’s problems. Financially, the company is still doing well: despite certain over-interpretations and inconsistencies, its profits and margins look great. However, it is only in less “official” indicators that one can see the investment thesis—built on the supposedly transformative impact of AI on the company, starting to wobble.
Headcount reduction or offshoring?
Beyond e-commerce and AI, Amazon is also successfully positioning itself as a leader in layoffs, claiming this is driven by productivity gains delivered by AI implementation across the organization. The data, however, says otherwise. From the company’s SEC 10-K filings, global headcount was 1,576,000 employees. That represents an increase of 20,000 versus the prior year. It is also hard to find signs of declines in the financial statements: in 3 out of 4 operating cost categories, costs rose in 2025—some of them significantly.
What casts Amazon in a particularly unfavourable light is an analysis of the geographic distribution of hiring conducted by the Bloomberry team.
Source: Bloomberry
The number of Amazon job postings in “low-cost” countries has increased by 154% since 2020. The leaders in this growth are India, Mexico, Brazil, and Japan. Despite the declared tens of thousands of layoffs in the US, headcount and costs increased. The employees didn’t disappear, only their address changed.
New outages, a new normal?
AI implementation is leaving its mark not only on employees but also on customers. Amazon’s flywheel—AWS—is starting to stall more and more often, in a way that appears strongly correlated with the degree of AI integration within the organization.
Analysing the frequency and duration of AWS outages, one can clearly see the situation worsening. Financial reports show phenomenal margins and growth in this segment, which forms the backbone of the company’s valuation narrative. But how long can it sustain this with declining service quality and reliability?
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