Amazon's AI Business Outlook is Promising
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 hours ago
0mins
Should l Buy AMZN?
Source: Fool
- Stock Performance Decline: Amazon (AMZN) has seen its stock price drop approximately 7% over the past year, yet its revenue and earnings have significantly increased, indicating strong fundamentals and potential for a rebound.
- Strong Cloud Growth: Amazon Web Services (AWS) achieved a 24% growth in Q4, marking the fastest rate in 13 quarters, highlighting its increasing importance in AI model development, which could drive stock recovery.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures during 2026, primarily for data center construction; while this will impact cash flows, it makes sense if AI computing demand continues to rise.
- Reasonable Investment Timing: With a current P/E ratio of 26.5, close to that of most large tech stocks, analysts believe this is a reasonable buying opportunity, with future stock price increases expected as the business improves.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
47 Analyst Rating
46 Buy
1 Hold
0 Sell
Strong Buy
Current: 199.600
Low
250.00
Averages
294.69
High
340.00
Current: 199.600
Low
250.00
Averages
294.69
High
340.00
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.
Amazon Stock Faces Nine-Day Decline Amid AI Spending Concerns
- Stock Decline: Amazon's stock has dropped 14% year-to-date and has faced a nine-day losing streak, the longest since July 2006, although Wall Street believes the stock is undervalued with a median target price of $285, indicating a potential 43% upside.
- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
- Accelerating Cloud Growth: Amazon Web Services (AWS) saw a 24% revenue increase in Q4, the fastest growth in 13 quarters, with CEO Andy Jassy noting that the custom chip business has surpassed a $10 billion annual revenue run rate, indicating that AI investments are beginning to yield returns.
See More
Amazon's AWS Shows Strong Performance, Stock Recovery Potential
- AWS Growth Acceleration: Amazon's cloud computing platform, AWS, grew at a pace of 24% in Q4, marking the fastest growth in 13 quarters, highlighting its critical role in AI model development and enhancing Amazon's competitive position in the market.
- Valuation Pullback Justified: Despite significant revenue and earnings growth, Amazon's stock has declined by approximately 7% since 2025, with its PE ratio dropping to 26.5 times, reflecting a market reassessment of its valuation, potentially providing a reasonable buying opportunity for investors.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2026, primarily for data center construction, which may impact cash flows; however, if AI computing demand continues to grow, this investment will support future business expansion.
- Investor Confidence Recovery: Although the Motley Fool analyst team did not include Amazon in their current best stock picks, analysts believe that Amazon is poised for a stock rebound in 2026, indicating a recovery in market confidence regarding its future performance.
See More
Amazon's AI Business Outlook is Promising
- Stock Performance Decline: Amazon (AMZN) has seen its stock price drop approximately 7% over the past year, yet its revenue and earnings have significantly increased, indicating strong fundamentals and potential for a rebound.
- Strong Cloud Growth: Amazon Web Services (AWS) achieved a 24% growth in Q4, marking the fastest rate in 13 quarters, highlighting its increasing importance in AI model development, which could drive stock recovery.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures during 2026, primarily for data center construction; while this will impact cash flows, it makes sense if AI computing demand continues to rise.
- Reasonable Investment Timing: With a current P/E ratio of 26.5, close to that of most large tech stocks, analysts believe this is a reasonable buying opportunity, with future stock price increases expected as the business improves.
See More
Amazon's AI Business Outlook Looks Promising
- Stock Performance Decline: Since 2025, Amazon's stock has dropped about 7%, despite significant revenue and earnings growth, indicating a market reassessment of its valuation that may impact investor confidence.
- Accelerated AWS Growth: In Q4 2022, Amazon's overall sales rose 14% year-over-year, with AWS growing at 24%, highlighting its increasing importance in AI model development and potential for future growth.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2026, primarily for data center expansion, which may strain cash flows; however, if AI computing demand persists, this investment could be justified.
- Investment Recommendation: Although The Motley Fool's analyst team did not include Amazon in their current top stock picks, they believe Amazon is poised for a rebound in 2026, making it a stock worth considering for long-term investors.
See More
Nvidia's Growth Outlook Over the Next Three Years Remains Positive
- Data Center Investment Driving Growth: Major tech companies like Alphabet, Meta, and Amazon plan to increase capital expenditures to nearly $500 billion in 2023, primarily for AI data center construction, which will directly boost Nvidia's processor sales and solidify its 81% market share.
- Revenue and Earnings Projections Surge: Analysts estimate that by 2029, Nvidia's annual revenue will reach $468 billion and earnings will hit $246 billion, representing over threefold growth from fiscal year 2025, indicating strong long-term growth potential.
- Potential Stock Volatility: Despite Nvidia's stock soaring 791% over the past three years, concerns about an AI bubble may lead to volatility, prompting investors to temper expectations, especially amid recent pullbacks in tech stocks.
- Potential to Outpace the Market: With ongoing investments in AI data center infrastructure, Nvidia's commanding lead in AI processors positions it well to potentially outperform the S&P 500 over the next three years, showcasing robust market competitiveness.
See More
FTC Chairman Raises Concerns Over Political Bias in Apple News
- Political Bias Allegations: FTC Chairman Andrew Ferguson expressed concerns in a letter to Apple CEO Tim Cook regarding allegations that Apple News systematically favors left-leaning media, which could potentially violate the FTC Act and impact consumer access to diverse information.
- User Impact: Ferguson highlighted that Apple News is widely used in the U.S., and if it indeed suppresses conservative content, it could negatively affect the diversity of information available to users, potentially leading to a decline in public trust in the platform.
- Market Reaction: The FTC's letter comes as Apple celebrates its 50th anniversary, raising concerns about the company's management of political content, which could affect its brand image and user loyalty, especially amid increasing political polarization.
- Financial Context: With a market capitalization of $4.05 trillion and record financial results, this political controversy could impact Apple's market performance and investor confidence moving forward.
See More
Amazon Stock Faces Nine-Day Decline Amid AI Spending Concerns
- Stock Decline: Amazon's stock has dropped 14% year-to-date and has faced a nine-day losing streak, the longest since July 2006, although Wall Street believes the stock is undervalued with a median target price of $285, indicating a potential 43% upside.
- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
- Accelerating Cloud Growth: Amazon Web Services (AWS) saw a 24% revenue increase in Q4, the fastest growth in 13 quarters, with CEO Andy Jassy noting that the custom chip business has surpassed a $10 billion annual revenue run rate, indicating that AI investments are beginning to yield returns.
See More
Amazon's AWS Shows Strong Performance, Stock Recovery Potential
- AWS Growth Acceleration: Amazon's cloud computing platform, AWS, grew at a pace of 24% in Q4, marking the fastest growth in 13 quarters, highlighting its critical role in AI model development and enhancing Amazon's competitive position in the market.
- Valuation Pullback Justified: Despite significant revenue and earnings growth, Amazon's stock has declined by approximately 7% since 2025, with its PE ratio dropping to 26.5 times, reflecting a market reassessment of its valuation, potentially providing a reasonable buying opportunity for investors.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2026, primarily for data center construction, which may impact cash flows; however, if AI computing demand continues to grow, this investment will support future business expansion.
- Investor Confidence Recovery: Although the Motley Fool analyst team did not include Amazon in their current best stock picks, analysts believe that Amazon is poised for a stock rebound in 2026, indicating a recovery in market confidence regarding its future performance.
See More
Amazon's AI Business Outlook is Promising
- Stock Performance Decline: Amazon (AMZN) has seen its stock price drop approximately 7% over the past year, yet its revenue and earnings have significantly increased, indicating strong fundamentals and potential for a rebound.
- Strong Cloud Growth: Amazon Web Services (AWS) achieved a 24% growth in Q4, marking the fastest rate in 13 quarters, highlighting its increasing importance in AI model development, which could drive stock recovery.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures during 2026, primarily for data center construction; while this will impact cash flows, it makes sense if AI computing demand continues to rise.
- Reasonable Investment Timing: With a current P/E ratio of 26.5, close to that of most large tech stocks, analysts believe this is a reasonable buying opportunity, with future stock price increases expected as the business improves.
See More
Amazon's AI Business Outlook Looks Promising
- Stock Performance Decline: Since 2025, Amazon's stock has dropped about 7%, despite significant revenue and earnings growth, indicating a market reassessment of its valuation that may impact investor confidence.
- Accelerated AWS Growth: In Q4 2022, Amazon's overall sales rose 14% year-over-year, with AWS growing at 24%, highlighting its increasing importance in AI model development and potential for future growth.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2026, primarily for data center expansion, which may strain cash flows; however, if AI computing demand persists, this investment could be justified.
- Investment Recommendation: Although The Motley Fool's analyst team did not include Amazon in their current top stock picks, they believe Amazon is poised for a rebound in 2026, making it a stock worth considering for long-term investors.
See More
Nvidia's Growth Outlook Over the Next Three Years Remains Positive
- Data Center Investment Driving Growth: Major tech companies like Alphabet, Meta, and Amazon plan to increase capital expenditures to nearly $500 billion in 2023, primarily for AI data center construction, which will directly boost Nvidia's processor sales and solidify its 81% market share.
- Revenue and Earnings Projections Surge: Analysts estimate that by 2029, Nvidia's annual revenue will reach $468 billion and earnings will hit $246 billion, representing over threefold growth from fiscal year 2025, indicating strong long-term growth potential.
- Potential Stock Volatility: Despite Nvidia's stock soaring 791% over the past three years, concerns about an AI bubble may lead to volatility, prompting investors to temper expectations, especially amid recent pullbacks in tech stocks.
- Potential to Outpace the Market: With ongoing investments in AI data center infrastructure, Nvidia's commanding lead in AI processors positions it well to potentially outperform the S&P 500 over the next three years, showcasing robust market competitiveness.
See More
FTC Chairman Raises Concerns Over Political Bias in Apple News
- Political Bias Allegations: FTC Chairman Andrew Ferguson expressed concerns in a letter to Apple CEO Tim Cook regarding allegations that Apple News systematically favors left-leaning media, which could potentially violate the FTC Act and impact consumer access to diverse information.
- User Impact: Ferguson highlighted that Apple News is widely used in the U.S., and if it indeed suppresses conservative content, it could negatively affect the diversity of information available to users, potentially leading to a decline in public trust in the platform.
- Market Reaction: The FTC's letter comes as Apple celebrates its 50th anniversary, raising concerns about the company's management of political content, which could affect its brand image and user loyalty, especially amid increasing political polarization.
- Financial Context: With a market capitalization of $4.05 trillion and record financial results, this political controversy could impact Apple's market performance and investor confidence moving forward.
See More
