Amazon Plans to Lay Off 16,000 Employees. Is Now the Time to Buy, Sell, or Hold AMZN Shares?

Amazon Announces Major Corporate Layoffs

On January 28, Amazon (AMZN) revealed plans to eliminate 16,000 positions from its corporate workforce, representing about 4.6% of its office-based employees. This move echoes the company’s previous rounds of layoffs in late 2022 and early 2023, when approximately 27,000 jobs were cut.

Beth Galetti, Amazon’s Senior Vice President of People Experience and Technology, explained that these job reductions are part of a broader initiative to streamline the organization and reduce unnecessary management layers. While Amazon employs over 1.5 million people, the majority work in warehouses rather than corporate roles.

Despite these workforce reductions, Amazon continues to hire in other divisions. Some observers attribute the layoffs to the growing use of artificial intelligence, which is automating many tasks. Others believe that insufficient returns on AI investments are prompting Amazon to tighten its corporate structure. Regardless of the cause, further job cuts may be on the horizon as the company reassesses its staffing needs.

Amazon Stock Overview

Amazon, founded by Jeff Bezos and headquartered in Seattle, is a global technology leader best known for its e-commerce platform. The company’s cloud computing arm, Amazon Web Services (AWS), has become a major driver of growth. Amazon is also among the leading firms investing heavily in artificial intelligence infrastructure.

In 2025, Amazon’s returns were slightly above 5%, which lagged behind the S&P 500’s 18% gain during the same period. Concerns about the profitability of massive AI investments—some companies are spending over $100 billion annually—have weighed on performance. While Amazon’s management maintains that many AI initiatives are still in the early stages, this uncertainty has impacted short-term investors.

Like several other tech giants that have struggled recently, Amazon’s shares are currently trading well below their five-year average valuation. For example, the company’s forward price-to-earnings ratio stands at 34.14, a steep 79% discount compared to its five-year average of 165.07. Other valuation metrics, such as forward EV/EBIT and price-to-book ratios, are also significantly lower than historical averages, though to a lesser extent.

Some of this undervaluation may be linked to slower growth rates. Over the past five years, Amazon’s earnings per share have grown at a compound annual rate of 37%. Projections for 2026 through 2028 suggest growth rates of 11%, 22%, and 24%, respectively. Although growth is decelerating, it remains substantial. With the company focusing on efficiency and awaiting the results of its AI investments, this period could present a compelling opportunity for investors.

Strong Cloud Performance in Q3

Amazon’s third-quarter earnings, released on October 30, showed an earnings per share of $1.95, far surpassing the expected $1.57. This strong performance led to a post-market stock surge of over 10%. AWS generated $33 billion in revenue, while advertising brought in $17.7 billion, with both segments exceeding analyst forecasts.

Although Wall Street’s outlook for Amazon’s future earnings is moderate, the CEO has described the company’s current growth as the fastest since 2022. He anticipates that robust demand for AI will soon positively impact profits. Over the past year, Amazon has added 3.8 gigawatts of capacity. The company’s progress in AI has faced skepticism, but rapid changes in the market could alter perceptions. In October 2025, Amazon launched Project Rainer, an $11 billion AI data center, and plans to continue investing heavily in similar projects.

Amazon’s fourth-quarter earnings report is scheduled for February 5, and investors are eager to see what the company will deliver.

Analyst Opinions on Amazon Stock

Analysts overwhelmingly rate Amazon as a “Strong Buy,” especially as the company rebounds from last year’s underperformance. The average price target is $297.67, representing more than 22.5% upside from current levels. Amazon is also expected to invest $50 billion in OpenAI, which could prompt analysts to adjust their forecasts. The highest target price on Wall Street is $360, suggesting nearly 50% potential gains.