Amazon’s Grocery Delivery Push Meets Market Caution

Amazon is making a bold strategic move to capture a larger share of the grocery market, sending ripples of concern through its competitors. Despite this aggressive expansion, the company's stock performance tells a different story, weighed down by technical resistance and ongoing legal settlements. While the core business, particularly cloud computing, shows robust health, investors remain watchful of the costs associated with this new front in the retail war.

The company's recent quarterly results demonstrated underlying strength, with revenue climbing 13% year-over-year to $180.2 billion. The standout performer continues to be Amazon Web Services (AWS). The cloud division, benefiting massively from demand for AI infrastructure, posted an operating income of $11.4 billion on accelerated revenue growth of 20%. In response, Amazon is expanding its data center footprint and developing new proprietary chips like the Graviton5.

However, this solid performance is juxtaposed with significant one-time costs. The company has extended its list of special charges by agreeing to a tax settlement with Italian authorities, requiring a payment of €510 million.

Aggressive Expansion in Competitive Grocery Space

The primary source of recent sector anxiety is Amazon's decision to dramatically scale its same-day grocery delivery service to more than 2,300 cities. This announcement immediately pressured the shares of direct rivals such as Maplebear (Instacart) and Uber. The strategic rationale is clear: since its launch in August 2025, the perishable goods offering has grown by over 30%. Internal data indicates that customers who order fresh groceries shop almost twice as frequently as those who only use standard e-commerce services.

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Cost-Cutting and Technical Stock Pressure

To further bolster profitability, CEO Andy Jassy is implementing deep cost-cutting measures. The company plans to eliminate approximately 14,000 administrative roles to reduce bureaucracy and streamline processes using artificial intelligence.

Despite the fundamental strength of AWS and a clear growth strategy, the stock is facing technical challenges. Shares closed on Friday at €192.76, trading below the critical 200-day moving average. Since the start of the year, the stock has declined by over 10% and remains well below its 52-week high. While many analysts view the current level as a potential entry point, overall market sentiment stays cautious.

The key question for future performance is whether the aggressive grocery sector expansion can maintain margins and if the cloud division's growth can offset restructuring expenses. With further workforce adjustments already signaled for 2026, the focus for the coming quarters will remain squarely on driving efficiency.