Amazon's AI Investments Expected to Boost Performance in 2026
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2d ago
0mins
Source: NASDAQ.COM
- Increased Capital Expenditures: Amazon's capital expenditures reached $115.9 billion in Q3 2025, while free cash flow fell to $14.78 billion; however, this investment is crucial for establishing a robust AI infrastructure that will enhance its competitive position in the market.
- Cloud Computing Growth: Amazon Web Services (AWS) generated $33 billion in revenue in Q3 2025, marking a 20% year-over-year increase, with a profit margin of 34.6%, underscoring the critical role of cloud computing in AI development.
- AI Chip Innovation: The introduction of the Trainium3 chip in December allows developers to save up to 40% on costs, reducing reliance on Nvidia chips, which not only lowers capital expenditures but also opens up new revenue streams for Amazon.
- Optimistic Market Outlook: Despite Amazon's stock rising only 5% in 2025, below the S&P 500's 16%, the anticipated growth of the AI market to $4 trillion by 2030, combined with Amazon's low price-to-sales ratio, positions it as a potentially undervalued investment for 2026.
Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AMZN is 294.71 USD with a low forecast of 250.00 USD and a high forecast of 340.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
43 Analyst Rating
40 Buy
3 Hold
0 Sell
Strong Buy
Current: 246.290
Low
250.00
Averages
294.71
High
340.00
Current: 246.290
Low
250.00
Averages
294.71
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.
