Amazon Stock Just Got Pummeled. Buy the Dip?

Despite reporting second-quarter revenue and earnings per share far ahead of analysts' average estimate for the period, shares of Amazon (NASDAQ: AMZN) sold off sharply following the earnings report. As of this writing, the stock is down about 8% since the report in late July. The main reason for the stock's severe decline is likely the company's lower than anticipated growth in its cloud-computing business, Amazon Web Services (AWS). The market may be worried that much faster growth at (NASDAQ: MSFT) and 's (NASDAQ: GOOGL) cloud businesses is a sign that the important Amazon service is losing its edge in the world of artificial intelligence (AI). In addition, investors may have some concerns about Amazon's guidance for third-quarter profitability.

But has the market overreacted? I believe so. Yes, AWS's slowing growth is something investors should keep an eye on. But the stock's pullback has arguably more than compensated for the increased risks associated with this part of Amazon's sprawling business.

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Source Fool.com