Amazon stock has been on a wild ride as Amazon.com Inc. (NASDAQ: AMZN) overtook Walmart in annual revenue while announcing a $200 billion capital expenditure plan for AI. Investors are balancing excitement about the company’s growth against concerns over sky-high spending and market volatility.
Amazon is investing $200 billion in AI and cloud infrastructure to support growth in 2026. [Amazon]
Shares have slid roughly 12% over the past year despite strong revenue growth and booming cloud demand. Wall Street analysts, however, are still largely bullish, with consensus forecasts suggesting substantial upside over the next year or so.
Amazon Tops Walmart in Annual Revenue
Amazon raked in $716.9 billion in 2025, nudging past Walmart’s $713.2 billion. Walmart had held the crown since 2001, when it overtook Exxon Mobil. This shift marks a rare shake-up in U.S. corporate rankings.
The growth numbers tell the story. Amazon’s revenue jumped 12.4% year over year, while Walmart grew 4.7%. With Amazon pulling ahead, the gap looks likely to widen. Experts point to Amazon’s more diverse revenue mix as the main advantage over Walmart’s heavy reliance on brick-and-mortar sales.
AWS Remains the Cash Engine for Amazon Stock
Amazon Web Services (AWS) continues to dominate the narrative around AMZN stock. The cloud unit pulled in a $142 billion annualized run rate and grew 24% year over year in Q4. It now makes up about 18% of total company revenue.
AWS continues to drive high-margin revenue, growing 24% year over year in Q4 2025. [Amazon]
AWS scored big contracts with Visa, Salesforce, DoorDash, and OpenAI. Management expects more businesses to shift from on-prem systems to AWS. CEO Andy Jassy said Amazon knows how to turn cloud demand into strong returns on invested capital.
$200 Billion AI Investment Sparks Debate
Amazon plans to drop $200 billion in 2026, mostly on AI-focused data centers. The aim is to handle surging demand and cement its lead in cloud computing. The sheer size of the investment startled investors.
Amazon’s $200 billion investment in AI infrastructure aims to scale cloud and AI services globally. [AI Business]
The spending has put some pressure on Amazon stock. Questions swirl about whether such massive outlays will pay off quickly enough. Analysts note that while short-term free cash flow may take a hit, Amazon could emerge as a major generative AI winner over time.
Advertising and Retail Boost the Bottom Line
Amazon’s retail and advertising arms aren’t slowing down. Advertising revenue rose 22% year over year in Q4, driven by Prime Video, which now reaches 315 million viewers globally.
Amazon expanded same-day delivery to over 2,300 towns in 2025, supporting retail and advertising growth. [Bloomberg]
Retail remains strong, too. Same-day grocery delivery expanded to over 2,300 towns in 2025, with 100 million customers ordering in a single year. U.S. retail market share sits around 9%, up from roughly 6% pre-pandemic.
Tariff Concerns Weigh on Amazon Stock
Macro issues are also shaking Amazon’s stock. A 15% U.S. tariff under Section 122 has investors worried about rising import costs. As a global marketplace hub, Amazon feels this impact on both sellers and shoppers.
Higher tariffs could push prices up, potentially slowing demand. Traders watch updates from U.S. Customs closely. Sudden policy shifts could affect earnings guidance more than headline news, creating short-term volatility in Amazon shares.
Analysts See Room for Stock Gains
Amazon trades at about 22 times projected 2027 earnings, with expected growth around 20%. Wall Street’s consensus calls AMZN a buy, with upside above 40% from current levels.
Morgan Stanley analyst Brian Nowak reaffirmed a “top pick” rating with a $300 price target. He cited strong AWS growth and advertising momentum as key drivers. Even with capital expenditures looming, many analysts see Amazon stock as undervalued given its long-term potential.
Seth Klarman Bets Big on Amazon
Billionaire Seth Klarman increased exposure to AMZN in Q4 2025. His firm, Baupost Group, invested nearly $500 million, making Amazon its second-largest holding at 9.3%.
Billionaire investor Seth Klarman increased exposure to Amazon stock, making it Baupost’s second-largest holding. [Bloomberg]
Klarman reduced his stake in Alphabet by 41% to fund the move. Alphabet had surged 65% in 2025, making it less attractive. Amazon’s modest 5% gain over the same period made it look like a bargain to value-focused investors.
Global Expansion: India Campus Highlights Growth
Amazon recently opened its second-largest office in Asia in Bengaluru, India. The 12-story campus spans 1.1 million square feet and supports over 7,000 employees across e-commerce, technology, and payments teams.
The company has already invested over $40 billion in India and plans another $35 billion by 2030. The campus sits about 15 kilometers from Kempegowda International Airport and features energy-efficient design, flexible workspaces, and recreational facilities for employees.
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Amazon Stock Outlook for 2026
Amazon guides for 11% to 15% revenue growth next quarter. Analysts expect EPS to accelerate in 2027 as AI infrastructure scales and utilization improves. The company’s growth story balances high spending with the potential for long-term gains.
Amazon stock faces both risk and opportunity. AWS growth, advertising expansion, and retail performance support a bullish outlook. Yet, heavy capital expenditures and macro uncertainties could cause short-term bumps.
Investors will be watching execution closely. If Amazon delivers on cloud demand and AI integration, stock valuations could rise. If spending pressures margins, multiples may compress. The next several quarters will test AMZN’s position as a leader in cloud, AI, and retail innovation.
FAQs
- What drives Amazon’s stock price movements?
Amazon’s stock price is influenced by several factors, including revenue growth, profitability, cloud business performance (AWS), capital expenditure,s such as its $200 billion AI investment, and broader market trends. Recent volatility is tied to concerns about the impact of heavy AI infrastructure spending on short-term returns.
- Why has Amazon stock been volatile recently?
Shares have struggled partly because investors are wary of Amazon’s large AI and data center expenditures affecting short-term profits, even as AWS and advertising continue to grow.
- Is Amazon stock considered a buy by analysts?
Most Wall Street analysts rate Amazon as a buy, forecasting potential upside based on AWS growth, advertising expansion, and long-term opportunities, despite recent stock weakness.
- How does Amazon’s financial performance compare to rivals like Walmart?
Amazon surpassed Walmart in annual revenue in 2025, reflecting faster year-over-year growth driven by e-commerce, AWS, and advertising, even though the stock has at times lagged broader markets.
- How can an investor buy Amazon stock?
Investors can purchase Amazon stock through brokerage accounts. Many brokers also offer fractional shares, allowing investment even for those who cannot afford a full share.
- Does Amazon pay dividends?
Amazon does not pay dividends. The company reinvests profits into growth areas such as technology, infrastructure, logistics, and AI.
- Can investors buy Amazon through index funds or ETFs?
Yes. Investors can gain exposure to Amazon through index funds or ETFs that hold Amazon shares alongside other company stocks.
- Is Amazon stock a good long-term investment?
Many long-term investors view Amazon positively due to its diversified revenue streams and growth areas like AWS and advertising. Historical returns have been strong, and forecasts indicate continued growth.
- What risks affect Amazon’s stock future performance?
Key risks include competition in cloud and retail markets, large capital expenditures that may weigh on profits, supply chain challenges, and macroeconomic conditions that impact consumer spending.
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