Amazon's Disappointing 2025, AWS Growth Accelerates
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5h ago
0mins
Source: NASDAQ.COM
- Disappointing Shareholder Returns: Amazon's stock gained only 5% in 2025, primarily due to valuation issues with its cloud computing unit, AWS, which traded at a high forward P/E of 44 times, hindering overall stock performance.
- Importance of Cloud Business: Although AWS accounts for only 18% of Amazon's total sales, it contributed 66% of operating profits in Q3, showcasing its strong profitability with a 35% operating margin, highlighting its core strategic role in the company.
- Accelerating Growth Rate: AWS revenue increased by 20% year-over-year in Q3, marking its best performance in several years, and if this growth momentum continues, it is expected to significantly boost Amazon's stock price in 2026, improving investor sentiment.
- Valuation Rebound Opportunity: Amazon's current P/E ratio has dropped to 29 times, nearing historical lows, presenting an excellent buying opportunity, especially as most tech stocks remain at 30 times forward earnings, indicating potential for market reassessment of Amazon.
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 294.69 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.
47 Analyst Rating
46 Buy
1 Hold
0 Sell
Strong Buy
Current: 234.340
Low
250.00
Averages
294.69
High
340.00
Current: 234.340
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.
