Amazon shares suffer their worst drop in almost two years amid a strong wave of sales on Wall Street

The company’s shares were trading around $165, making it one of the biggest drags on the Nasdaq. Amazon is on track to lose around $188 billion in market value if losses continue. Its worst in nearly two years was when it traded near $80 in December 2022.

“Consumer spending trends that are pitting retail competitors against each other appear to have finally caught up with Amazon’s P&L,” said Michael Morton, an analyst at MoffettNathanson.

Sales at Amazon’s online stores rose 5% in the second quarter to $55.4 billion, compared with 7% growth in the first quarter.

Competition from Temu and Shein has intensified in the e-commerce business, with the companies selling a wide variety of products at bargain prices directly from China.

“Amazon faces two challenges this year: a consumer who continues to seek lower prices and competition primarily from discount sites like Temu and Shein,” said Art Hogan, chief market strategist at B. Riley Wealth.

Amazon: what the market is looking at

United Parcel Service, the world’s largest package delivery firm, is raising rates to boost revenue, which has been declining after Temu and Shein made low-margin, slower deliveries a bigger part of the Atlanta-based company’s business. Amazon is UPS’s biggest customer.

However, Amazon’s quarterly profit and cloud computing sales beat analysts’ estimates.

Revenue at Amazon Web Services, its cloud unit, grew a stronger-than-expected 19% to $26.3 billion, days after Microsoft’s Azure cloud division missed market estimates and raised further concerns about high AI spending by big tech companies.

Seattle-based Amazon is trying to catch up with rivals Microsoft, which partners with OpenAI, and Google in developing its own large language models that can respond almost instantly to complicated queries or requests.