Amazon Reports 24% Growth in Ad Revenue to $17.7 Billion in 2025
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 04 2026
0mins
Should l Buy AMZN?
Source: Fool
- Ad Revenue Growth: Amazon's online advertising revenue surged 24% year-over-year in Q3 to $17.7 billion, significantly enhancing overall profitability despite ads accounting for less than 10% of total revenue.
- Cloud Computing Acceleration: Amazon Web Services (AWS) achieved a 20% year-over-year growth rate, returning to 2022 levels, indicating a growing trend of businesses turning to AWS to support their AI needs, thus driving sustained expansion in cloud services.
- Surge in AI Chip Demand: Amazon's Trainium2 AI chip business grew 150% sequentially, now a multibillion-dollar segment that reduces chip costs and strengthens the company's competitive edge in AI, further propelling overall business growth.
- Overall Financial Performance: Despite a mere 5% stock price increase over the past year, Amazon reported a 13% year-over-year revenue growth and a 38% rise in net income in Q3, reflecting strong fundamentals that may set the stage for a stock price rally in 2026.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 204.860
Low
175.00
Averages
280.01
High
325.00
Current: 204.860
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Poor Stock Performance: Amazon's stock rose only 5.2% in 2025, the worst among the 'Magnificent Seven', and has dropped 10% year-to-date in 2026, reflecting investor concerns over its risk-taking strategy.
- High-Risk Investments: Amazon's aggressive spending on AI infrastructure and robotics aligns with its historical bold investment approach, yet it faces skepticism from investors in a market that favors safer, dividend-paying companies.
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See More
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- Cash Flow Pressure: Amazon is projected to be free cash flow negative in 2026 due to a capital expenditure plan of $200 billion, despite achieving $139.5 billion in operating cash flow in 2025, which was a 20% increase from 2024.
- Poor Stock Performance: Amazon's stock rose only 5.2% in 2025, the worst among the 'Magnificent Seven', and has dropped 10% year-to-date in 2026, reflecting investor concerns over its risk-taking strategy.
- High-Risk Investments: Amazon's aggressive spending on AI infrastructure and robotics aligns with its historical bold investment approach, yet it faces skepticism from investors in a market that favors safer, dividend-paying companies.
- Market Opportunity: Despite the pressure, increased demand from Amazon's high-margin AWS segment could lead to long-term efficiency improvements, suggesting that for investors confident in its AI spending translating into cash flow growth, the current stock price may represent a buying opportunity.
See More
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- Amazon's Transformation: Despite facing a $200 billion pressure from AI infrastructure investments, Amazon (NASDAQ: AMZN) reported high-margin revenue of $69 billion in 2025, a 22% increase, showcasing its ongoing innovation in e-commerce and cloud computing, with potential for growth recovery.
- Berkshire's Insurance Advantage: Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) derives about one-third of its value from its insurance business, leveraging a 'collect-now, pay-later' model to invest float funds, ensuring sustainable growth and profitability for the future.
- Google's Cloud Potential: Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) saw a 48% year-over-year increase in cloud revenue, reaching $17.6 billion, with the cloud computing industry projected to be worth $3.3 trillion annually by 2032, positioning Google to enhance its market presence through AI investments.
- Investor Confidence: Although Amazon is not currently listed among the top investment stocks, its long-term growth potential and innovative capabilities make it a noteworthy investment, prompting investors to carefully assess market dynamics and corporate strategies.
See More
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- Cloud Market Overview: Amazon's AWS cloud computing platform continues to dominate the market in 2023, achieving an annual revenue of $10 billion, showcasing its strong influence in the tech sector, while Nebius's projected annual recurring revenue of $7 billion to $9 billion in 2026 still pales in comparison to Amazon's market position.
- Nebius Growth Potential: Nebius achieved $1.25 billion in annual recurring revenue in 2025, with significant growth expected in 2026, indicating its popularity among AI developers; however, it remains insignificant compared to Amazon's vast market share.
- Amazon's Technological Edge: Amazon not only offers top-tier computing equipment but has also designed its own chips, generating $10 billion in annual revenue and growing at a triple-digit pace, further solidifying its leadership in the cloud computing space and demonstrating its robust R&D capabilities and market adaptability.
- Investment Opportunity Analysis: While Nebius is experiencing rapid growth, it still lags behind Amazon, and investors may consider investing in both companies to benefit from Amazon's steady growth and Nebius's explosive potential, creating a balanced investment portfolio.
See More
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- Revenue Surge Expected: Nebius reported an annual recurring revenue of $1.25 billion at the end of 2025, with projections for 2026 ranging from $7 billion to $9 billion, indicating rapid growth in its cloud computing capacity that could attract more investor interest.
- Intensifying Market Competition: Despite Nebius's strong growth momentum, Amazon's AWS custom chip business has an annual run rate of $10 billion and is growing at a triple-digit pace, underscoring Amazon's continued dominance in the cloud computing sector, posing significant challenges for Nebius.
- AI Demand Driving Growth: The surging demand for cloud computing among AI startups has made Nebius's full-stack solutions highly popular, which not only enhances its market share but could also significantly alter the competitive landscape of the cloud computing industry in the coming years.
- Investment Opportunities Emerging: Although Nebius has not been recommended as a top investment by The Motley Fool, its potential synergy with Amazon presents investors with a dual opportunity for stability and rapid growth, appealing to those interested in AI infrastructure investments.
See More
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- Cloud Market Potential: Nebius achieved an annual recurring revenue of $1.25 billion by the end of 2025, with projections for 2026 reaching between $7 billion and $9 billion, indicating strong demand and rapid growth potential in the AI sector, positioning it as a significant competitor in the cloud market.
- Amazon's Competitive Edge: Amazon's AWS custom chips have an annual revenue run rate of $10 billion, growing at a triple-digit pace, showcasing its robust capabilities in cloud infrastructure and reinforcing its market leadership.
- Dependence of AI Startups: Many AI startups opt to rent cloud computing capacity rather than build their own data centers, and Nebius meets this demand with cutting-edge equipment and rapid deployment capabilities, driving explosive growth in its product offerings.
- Investment Opportunity Analysis: While Nebius shows strong growth potential, it remains insignificant compared to Amazon; investors may consider investing in both companies to capitalize on Amazon's stability and Nebius's rapid growth for dual benefits.
See More
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- Tariff Policy Shift: The U.S. Supreme Court ruled much of Trump's 'reciprocal' tariffs invalid, yet Trump quickly announced a global tariff increase to 15%, indicating ongoing policy uncertainty and market reactions.
- Importer Dilemma: U.S. importers are still paying the now-illegal tariffs due to Customs not updating its system, leading to an estimated $175 billion refund issue that could impose financial strain on businesses.
- Positive Market Reaction: Despite challenges to tariff policies, major U.S. indexes rose following the ruling, with Amazon shares jumping nearly 2.6%, reflecting market optimism regarding the policy shift.
- International Trade Impact: India has postponed its planned trade visit to Washington to assess the ruling's implications, highlighting the potential for significant effects on international relations and trade negotiations.
See More
