Amazon’s AI Ambitions Face Headwinds as Chip Unit Exodus Grows

Amazon’s monumental push to develop proprietary artificial intelligence chips, a cornerstone of its strategy to reduce reliance on expensive external suppliers, is encountering significant internal turbulence. The departure of yet another key executive from its semiconductor division is raising market concerns about potential delays to the tech giant’s ambitious hardware roadmap.

Executive Departures Strain Strategic Pivot

The semiconductor team at Amazon has now lost its second high-ranking manager in a matter of months with the exit of Gadi Hutt. These personnel losses strike at a critical juncture for the company. Amazon Web Services (AWS) CEO Matt Garman recently underscored the company’s commitment to this direction, defending plans to invest approximately $200 billion in AI infrastructure by 2026. The development of in-house processors is central to this plan, aimed at slashing the immense costs associated with third-party accelerators and securing long-term margins for the cloud business.

This strategic overhaul is extracting a toll elsewhere within the organization. The company has eliminated about 30,000 positions across two rounds of layoffs. Pressure on the AWS cloud unit is mounting, with its market share in the sector declining from 39% to 37.7% in 2024. Garman has projected that intense demand for AI infrastructure will persist for another five to ten years, a forecast intended to justify the massive upfront capital expenditures.

Should investors sell immediately? Or is it worth buying Amazon?

Insider Selling Activity Intensifies

The internal upheaval and capital-intensive strategy are being reflected in the stock’s recent performance. On Friday, shares declined by 3.51% to €173.92, ranking among the weaker performers in a broadly retreating technology sector. Transactions by corporate insiders reveal a pronounced trend. Over the past six months, there have been 62 insider sales and not a single purchase.

CEO Andy Jassy alone divested nearly 40,000 shares, while AWS chief Garman sold approximately 17,700 securities in late February. Cumulatively, insider sales have reached a volume of nearly $14.7 million over the last 90 days.

Analyst Confidence Remains Unshaken

Despite the internal restructuring and notable insider selling, financial analysts are maintaining their bullish outlook. Erste Group Bank projects earnings per share for 2026 to reach $7.74, a figure substantially above the general consensus estimate of $6.31. Major investment banks, including JP Morgan and Citi, have reaffirmed their price targets in the range of $280 to $285. The average price target among all 58 analysts tracked currently stands at $286.66, implying an upside potential of roughly 43% from the current U.S. trading price.