Sacrificing 30,000 Jobs to Fuel the AI Engine

By Ethan Goldman, junior analyst, Chaikin AnalyticsThousands of Amazon (AMZN) employees will be looking for new jobs…

If you haven’t heard, yesterday morning the online retail giant announced it would cut 16,000 roles across the company.

Now, this is a continuation of the cuts that Amazon started in October. That first wave slashed 14,000 roles. In that announcement, Amazon said that it was focusing on ensuring that the company was investing in its “biggest bets.”

And as yesterday’s announcement of the new round of layoffs stated…

We’ve been working to strengthen our organization by reducing layers, increasing ownership, and removing bureaucracy.
Amazon is also scaling back on some of its brick-and-mortar stores…

In a separate announcement this week, the company said it would be closing all of its Go convenience stores and Fresh supermarkets. It said that some locations would be converted to Whole Foods grocery stores.

The company said that those closures would allow it to “prioritize investment in growth areas.”

There’s more to this than meets the eye, folks…

Amazon’s biggest bet isn’t on its online retail business. That has already proven to be lucrative.

You see, Amazon continues to depart from its roots as an online retailer. It’s continuing to redefine itself in the tech world…Recommended Links:

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Amazon Places Its ‘Biggest Bet’ on AI and Data Centers

Early last year, the company said it expected $100 billion in capital expenditures for 2025. And as you probably guessed, AI infrastructure is driving all that spending.

We’ll have to wait until Amazon releases its full-year earnings report next week to find out how the exact figure will come in for the year. But $100 billion mostly on AI is an eye-popping amount – even for a behemoth like Amazon.

It’s easy to see why Amazon pushes deeper into this space. The company’s Amazon Web Services (“AWS”) cloud platform is a huge moneymaker.

In Amazon’s most recent quarterly results, AWS brought in the lowest total revenue of the company’s three segments. But it was the most profitable segment by far. 

Amazon’s operating income from its North America and International segments totaled roughly $6 billion in the third quarter of 2025.

Meanwhile, the AWS segment boasted more than $11 billion in operating income.

Keep in mind that AWS is the biggest cloud-service provider in the world by market share…

As of the third quarter, it beats the runner-up – Microsoft’s (MSFT) Azure service – by nine percentage points. And Amazon knows just how important it is to keep that lead.

Put simply, Amazon needs to keep its momentum up in cloud services and AI in order to stay ahead of Microsoft.

This helps explain why Amazon is willing to sacrifice 30,000 workers – and some of its brick-and-mortar stores.

Retail isn’t Amazon’s “biggest bet” anymore. The company is increasingly moving on to higher-growth areas like AI.

Now, you might expect that this momentum would be playing out in Amazon’s stock. But that hasn’t quite happened.

In fact, the Power Gauge recently flashed a few warnings for the stock…

The Power Gauge Flashes Caution for Amazon

The Power Gauge gives Amazon a “neutral” rating right now.

The stock is only up about 2% over the past year. That compares with a roughly 15% gain for the S&P 500 Index during the same time frame.

Put simply, that’s poor relative strength versus the broad market. Take a look at the chart below…In the first panel below the chart, you can see the big periods of weak relative strength. You’ll also note that the Power Gauge flashed two separate warnings related to weak relative strength on January 2. Those came after another signal in early December.

Amazon is the king of online retail. Its AWS branch rakes in cash. And the company has been betting big on AI.

But right now, the Power Gauge tells us to be careful with Amazon’s stock.

Good investing,

Ethan Goldman

Market View

Major Indexes and Notable Sectors  # HLD:    BULLISH    NEUTRAL    BEARISHDow 30

+0.01%718 5S&P 500

-0.01%112258 130Nasdaq

+0.33%2753 26Small Caps

-0.54%591981 317Bonds

-0.23%

— According to the Chaikin Power Bar, Small Cap stocks are more Bullish than Large Cap stocks. Major indexes are mixed.*  *  *  *

Sector Tracker

Sector movement over the last 5 daysInformation Technology+3.77%Energy+2.67%Communication+1.85%Materials+1.44%Utilities+0.72%Consumer Discretionary+0.3%Consumer Staples-0.15%Financial-0.88%Industrials-1.33%Real Estate-1.68%Health Care-2.5%*  *  *  *

Industry Focus

Dow Jones REIT Services53956

Over the past 6 months, the Dow Jones REIT subsector (RWR) has underperformed the S&P 500 by -7.06%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #21 of 21 subsectors and has moved down 1 slot over the past week.Indicative StocksADCAgree Realty CorporaAIVApartment InvestmentAKRAcadia Realty Trust*  *  *  *

Top Movers

GainersSTX+19.14%INTC+11.04%WDC+10.7%TXN+9.94%SNDK+9.6%LosersCVNA-14.17%APH-12.2%AXON-9.89%SWKS-7.94%TXT-7.9%*  *  *  *

Earnings Report

Earnings SurprisesGEV 
GE Vernova Inc. Q4 $12.91 Beat by $9.77NVR 
NVR, Inc. Q4 $121.54 Beat by $15.64TSLA 
Tesla, Inc. Q4 $0.50 Beat by $0.05T 
AT&T Inc. Q4 $0.52 Beat by $0.05LVS 
Las Vegas Sands Corp. Q4 $0.85 Beat by $0.08*  *  *  *

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