Amazon's stock finds itself in a peculiar position as it heads into its annual summer Prime Day event. The shares are under pressure and only slightly higher year-to-date. Just a few weeks ago the stock reached an all-time high, but it has since pulled back meaningfully from that peak. This sets up a genuine tug-of-war between bullish and bearish views, with the focus this week shifting to the company's e-commerce business even as the cloud division has been the real engine of recent momentum.
Two Engines, Two Growth Rates
The core tension in the Amazon story is the divergence between its two principal businesses. Amazon Web Services (AWS) has driven recent momentum because it is growing faster than the e-commerce side — up 28% in March compared with less than 20% for the commerce business. AWS is also where Amazon generates most of its profitability, which is precisely why its trajectory matters so much to the overall investment case.
A key bullish data point is the reacceleration in AWS growth. Two quarters ago AWS grew at 24% year-over-year; last quarter that climbed to 28%; and the expectation is for growth to move back above the 30% level. That kind of reacceleration is a clear benefit for Amazon going forward, given how concentrated the company's profits are in the cloud unit.
Beyond AWS, advertising continues to be a meaningful and expanding contributor. On a trailing twelve-month basis, the advertising business sits at roughly $70 billion, and it continues to grow at more than double digits on a year-over-year basis. This is another positive layer in the profitability story.
Prime Day as a Read on the Consumer
The Prime Day event runs from June 23rd through the 26th — notably earlier than usual this summer. The central question is whether this cycle of Prime Days acts as a genuine tailwind or simply functions as a temperature check on the state of the consumer.
The bullish interpretation is that Prime Day will demonstrate two things at once: the continuing strength of the US consumer, and the fact that Amazon dominates e-commerce. Amazon's competitive moat in e-commerce keeps widening, and this ever-expanding advantage means the event should serve as another key data point confirming that the US consumer is still active and spending.
Supporting external data reinforces this. According to an Adobe report released ahead of the event, online sales during this period are expected to reach about $26.3 billion — roughly 9% higher than last year. Importantly, this growth comes even though competitors such as Target, Walmart, and others are running their own competing sales. Amazon is expected to account for about 60% of those online sales, which would be the highest such share since around 2019. In short, retail sales over the period are projected to be strong.
The CapEx Overhang
If the demand picture looks healthy, why is the stock weak? The dominant explanation is capital expenditure. Amazon's CapEx spend is now reaching upwards of $200 billion, directed largely at AI infrastructure and other ambitious projects — including a satellite effort comparable to what SpaceX and others are pursuing. This heavy investment is the primary reason the stock has been consolidating or drifting lower; it was down about $11 on the day in question.
History offers a useful frame here. In Amazon's past, periods of aggressive spending have tended to coincide with stock weakness, and the stock has typically begun to outperform once those large investment cycles wind down. The pattern is consistent: when Amazon invests, it disrupts; it invests heavily and usually does okay. That historical track record does not guarantee the same outcome this time, but it explains the optimism behind looking past the current spending.
Crucially, this CapEx concern is not unique to Amazon. Microsoft and Meta Platforms are exhibiting the same dynamic — they are not decreasing their CapEx spend but are actually signaling they will likely spend even more as they race to stay at the forefront of the AI infrastructure buildout. This shared, escalating spending is the concern weighing on many investors across the group.
Adding to Amazon's pressure are sector dynamics. The stock is getting caught up in weakness in communication services and in consumer discretionary, reflecting the broad mix of businesses Amazon owns. As one of the so-called Magnificent Seven, it is under pressure in the near term, yet the longer-term view remains bright given how many things the company is doing well. The bearish technical read, meanwhile, notes the stock has pulled back roughly 16% from the all-time highs set just over a month ago and is now sitting at a key level — its 200-day simple moving average. The stock bounced off that level about a week earlier, and whether it holds is the open question.
The Bullish Trade: Buying the Dip with a Call Diagonal
The bullish example trade is structured as a "buy the dip" play using a call diagonal, deliberately chosen as a cheaper, risk-defined alternative to buying the expensive underlying stock (still around $233 on a per-share basis).
The structure: buy the July 10th expiration 235 call (about 18 days to expiration), which was at the money when the trade was first built and is now slightly out of the money, and sell against it the nearer-dated June 26th weekly 245 call (expiring in 4 days). This creates a $10-wide call diagonal. The bought July 10th call is the bullish portion of the trade, while the sold June 26th call offsets some of the cost.
The debit paid has been falling along with the stock — it started around $670, then $610, and was around $560 at the time of discussion. Whatever debit is paid is the maximum risk; for example, $610 of risk per spread, which is less than the $10 width of the diagonal. The position carries about 34 deltas, giving long upward exposure to Amazon at far lower cost than owning shares.
A key feature is the ability to roll the short option as it nears its 4-day expiration. If the stock moves higher, that not only pushes the position toward profitability but also increases what can be collected on rolls or adjustments of the short call. Collecting credits on those adjustments raises potential profit and lowers the risk on the trade, and there are a couple of opportunities to do this. The trade also exploits the disparity in implied volatility between the longer-dated July 10th 235 calls being bought and the June 26th weekly 245 call being sold. The position needs an upside move of about $5 to clear breakeven; the profit apex sits at or near the 245 strike, but because the cost is less than the width, anything above roughly 237 becomes profitable.
The Bearish Trade: A Put Vertical Targeting a Breakdown
The bearish example takes the opposite view, betting the stock breaks the 200-day simple moving average support and continues lower. It uses a bearish put vertical with more duration: the July 17th monthly options, about 25 days to expiration.
The structure: buy the 235 strike put (now in the money by a couple of dollars) and sell the 220 strike put against it, creating a $15-wide bearish put vertical. The debit was roughly $530 when first looked at, trading closer to $570 after the stock fell further. As the stock moves lower, the value of the spread expands. Paying $570 puts breakeven down around $229.30, so the trade definitely needs a downside move to work.
The expected move from now through July 17th is about $17.70, and the bearish trade was deliberately widened to $15 and brought a little inside that range, with the target set at $220. The duration is key: although the stock has to move for the position to pay off, there is time for it to do so. If the stock reaches the $220 target, the debit — currently around $530 — would expand to close to $15 (the full width), making the trade virtually a triple. Even short of the full target, at the current level it is worth at least two and a half times the cost. Like the bullish trade, risk is defined and limited to the debit paid.
The Bottom Line
The competing trades crystallize the broader debate. The bull case rests on AWS reaccelerating back above 30% growth, a dominant and widening e-commerce moat, strong Prime Day demand, robust advertising revenue, and the historical pattern of Amazon emerging stronger after heavy investment cycles. The bear case rests on the near-term weight of an enormous, still-rising CapEx program, sector-driven pressure, and a stock sitting precariously on key technical support after a 16% pullback. Both views agree on the central mechanism: AWS strength and AI-driven capital spending are pulling the stock in opposite directions, creating the see-saw effect that defines Amazon at this moment.
