Amazon's Stock Underperforms but Long-Term Prospects Remain Positive
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Should l Buy AMZN?
Source: Fool
- Sales and Profit Growth: Amazon's sales reached $716.9 billion in 2025, with North America and international segments accounting for 82%, and while operating income was $34.7 billion, representing only 43% of total income, it still indicates stable growth potential.
- Cloud Computing Advantage: Amazon Web Services (AWS) achieved a 14.5% increase in operating income to $45.6 billion in 2025, leading the market with a 30% share, showcasing strong competitive advantages and future growth potential.
- Capital Expenditure Plans: Despite plans to increase capital expenditures to $200 billion in 2025, significantly higher than $131.8 billion, management believes this will yield substantial returns for shareholders, although it may impact cash flow in the short term.
- Increased Valuation Attractiveness: Amazon's price-to-earnings ratio has dropped from 40 to 28, and while still above the S&P 500's 30, the current valuation is more attractive compared to its 10-year average of 82, suggesting potential for higher returns for long-term investors.
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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's Investment Outlook Analysis
- Sales Growth: Amazon's total sales reached $716.9 billion in 2025, with North America and international segments accounting for 82%, although operating income of $34.7 billion only represented 43% of total income, indicating stability and growth potential in its core business.
- Cloud Computing Advantage: Amazon Web Services (AWS) achieved a 14.5% increase in operating income to $45.6 billion in 2025, leading the market with a 30% share, showcasing its competitive edge in building and maintaining data centers.
- Capital Expenditure Plans: Despite plans to increase capital expenditures to $200 billion in 2026, significantly higher than $131.8 billion in 2025, management believes this will yield substantial returns for shareholders, reflecting confidence in future growth.
- Valuation Attractiveness: Amazon's price-to-earnings ratio has decreased from 40 to 28, enhancing its valuation appeal, with a 10-year average P/E of 82, better than the S&P 500's 30, suggesting potential for higher returns for long-term investors.
See More
Amazon's AI Investment Plans Trigger Stock Slump
- Stock Decline: Amazon's announcement of a $200 billion investment in artificial intelligence led to a significant intraday drop on February 6, with shares down 16.5% for the month ending February 10, nearing the 20% bear market threshold, indicating market concerns about its financial health.
- Cash Flow Concerns: Investors are worried about how Amazon will finance these massive AI expenditures, with speculation that it could push the company into cash-flow-negative territory, which would have serious implications for its future financial stability.
- Long-Term Performance Issues: As of February 10, Amazon's stock has only risen 25.3% over the past five years, which feels lackluster compared to the much higher returns of the Nasdaq-100 and S&P 500, potentially undermining investor confidence.
- Advertising Growth Potential: Despite the challenges, Amazon's advertising business grew 22% year-over-year in the fourth quarter, seen by market observers as an underappreciated growth driver that could support the company's recovery in the future.
See More
CoreWeave's Stock Surges 140% Post-IPO Amid AI Demand
- Strong IPO Performance: CoreWeave's stock soared over 300% following its IPO in late March, and despite some pullback, it remains up nearly 140% since debut, reflecting strong market confidence in its AI chip rental business.
- Significant Revenue Growth: The company has achieved triple-digit revenue growth for three consecutive quarters, primarily due to its flexible GPU rental service that meets the urgent demand for computing power from AI customers, thereby enhancing its competitive position in the market.
- Close Partnership with Nvidia: Nvidia not only holds shares in CoreWeave but has also pledged to purchase any unused cloud capacity until April 2032, indicating strong confidence in CoreWeave's future and further solidifying its position in the AI market.
- Future Investment Challenges: While CoreWeave faces high debt risks due to necessary infrastructure investments, growth investors willing to take on some risk may consider buying shares around the upcoming earnings report on February 26, potentially reaping substantial rewards as the AI sector continues to expand.
See More
CoreWeave's Stock Surges 140% Post-IPO Amid AI Demand
- Significant Revenue Growth: CoreWeave has experienced triple-digit revenue growth for three consecutive quarters, indicating strong demand in the AI workload market and enhancing its market position, which has attracted numerous customers to rent its Nvidia GPUs.
- Strong Stock Performance: Since its IPO in late March, CoreWeave's stock surged over 300% in the following months, and although it has since pared some gains, it remains up nearly 140% from its debut, reflecting market confidence in its future growth.
- Close Partnership with Nvidia: Nvidia, a key investor in CoreWeave, has pledged to purchase any unused cloud capacity until April 2032, demonstrating Nvidia's trust in CoreWeave and its potential in the AI market.
- Infrastructure Investment Challenges: To meet the increasing demand for its services, CoreWeave must invest heavily in infrastructure, leading to rising debt levels; while this poses risks for cautious investors, it presents a compelling opportunity for growth-oriented investors willing to take on some risk.
See More
Nvidia Shares Surge 1180% Amid Strong AI Spending Forecasts
- Stock Performance: Nvidia's shares have surged 1180% since early 2023, currently priced at $187, with Wall Street analysts generally viewing the stock as undervalued, as the median target price of $250 implies a 33% upside.
- Market Share: Nvidia holds over 80% market share in AI accelerators, and its full-stack strategy allows it to capture 30% of total AI data center capital expenditures as profit, showcasing its formidable competitive position in AI infrastructure.
- Capex Forecast: AI hyperscaler capital expenditures are projected to reach $650 billion in 2026, significantly up from initial estimates of a 19% increase, now revised to 70%, which is positive news for Nvidia as it stands to gain a larger market share.
- Industry Trends: Companies like Alphabet, Amazon, Meta, and Microsoft have all indicated substantial increases in capital expenditures, forecasting $180 billion, $200 billion, $125 billion, and $140 billion respectively for 2026, highlighting that AI investments are driving growth across the industry.
See More
Amazon's Stock Underperforms but Long-Term Prospects Remain Positive
- Sales and Profit Growth: Amazon's sales reached $716.9 billion in 2025, with North America and international segments accounting for 82%, and while operating income was $34.7 billion, representing only 43% of total income, it still indicates stable growth potential.
- Cloud Computing Advantage: Amazon Web Services (AWS) achieved a 14.5% increase in operating income to $45.6 billion in 2025, leading the market with a 30% share, showcasing strong competitive advantages and future growth potential.
- Capital Expenditure Plans: Despite plans to increase capital expenditures to $200 billion in 2025, significantly higher than $131.8 billion, management believes this will yield substantial returns for shareholders, although it may impact cash flow in the short term.
- Increased Valuation Attractiveness: Amazon's price-to-earnings ratio has dropped from 40 to 28, and while still above the S&P 500's 30, the current valuation is more attractive compared to its 10-year average of 82, suggesting potential for higher returns for long-term investors.
See More
Amazon's Investment Outlook Analysis
- Sales Growth: Amazon's total sales reached $716.9 billion in 2025, with North America and international segments accounting for 82%, although operating income of $34.7 billion only represented 43% of total income, indicating stability and growth potential in its core business.
- Cloud Computing Advantage: Amazon Web Services (AWS) achieved a 14.5% increase in operating income to $45.6 billion in 2025, leading the market with a 30% share, showcasing its competitive edge in building and maintaining data centers.
- Capital Expenditure Plans: Despite plans to increase capital expenditures to $200 billion in 2026, significantly higher than $131.8 billion in 2025, management believes this will yield substantial returns for shareholders, reflecting confidence in future growth.
- Valuation Attractiveness: Amazon's price-to-earnings ratio has decreased from 40 to 28, enhancing its valuation appeal, with a 10-year average P/E of 82, better than the S&P 500's 30, suggesting potential for higher returns for long-term investors.
See More
Amazon's AI Investment Plans Trigger Stock Slump
- Stock Decline: Amazon's announcement of a $200 billion investment in artificial intelligence led to a significant intraday drop on February 6, with shares down 16.5% for the month ending February 10, nearing the 20% bear market threshold, indicating market concerns about its financial health.
- Cash Flow Concerns: Investors are worried about how Amazon will finance these massive AI expenditures, with speculation that it could push the company into cash-flow-negative territory, which would have serious implications for its future financial stability.
- Long-Term Performance Issues: As of February 10, Amazon's stock has only risen 25.3% over the past five years, which feels lackluster compared to the much higher returns of the Nasdaq-100 and S&P 500, potentially undermining investor confidence.
- Advertising Growth Potential: Despite the challenges, Amazon's advertising business grew 22% year-over-year in the fourth quarter, seen by market observers as an underappreciated growth driver that could support the company's recovery in the future.
See More
CoreWeave's Stock Surges 140% Post-IPO Amid AI Demand
- Strong IPO Performance: CoreWeave's stock soared over 300% following its IPO in late March, and despite some pullback, it remains up nearly 140% since debut, reflecting strong market confidence in its AI chip rental business.
- Significant Revenue Growth: The company has achieved triple-digit revenue growth for three consecutive quarters, primarily due to its flexible GPU rental service that meets the urgent demand for computing power from AI customers, thereby enhancing its competitive position in the market.
- Close Partnership with Nvidia: Nvidia not only holds shares in CoreWeave but has also pledged to purchase any unused cloud capacity until April 2032, indicating strong confidence in CoreWeave's future and further solidifying its position in the AI market.
- Future Investment Challenges: While CoreWeave faces high debt risks due to necessary infrastructure investments, growth investors willing to take on some risk may consider buying shares around the upcoming earnings report on February 26, potentially reaping substantial rewards as the AI sector continues to expand.
See More
CoreWeave's Stock Surges 140% Post-IPO Amid AI Demand
- Significant Revenue Growth: CoreWeave has experienced triple-digit revenue growth for three consecutive quarters, indicating strong demand in the AI workload market and enhancing its market position, which has attracted numerous customers to rent its Nvidia GPUs.
- Strong Stock Performance: Since its IPO in late March, CoreWeave's stock surged over 300% in the following months, and although it has since pared some gains, it remains up nearly 140% from its debut, reflecting market confidence in its future growth.
- Close Partnership with Nvidia: Nvidia, a key investor in CoreWeave, has pledged to purchase any unused cloud capacity until April 2032, demonstrating Nvidia's trust in CoreWeave and its potential in the AI market.
- Infrastructure Investment Challenges: To meet the increasing demand for its services, CoreWeave must invest heavily in infrastructure, leading to rising debt levels; while this poses risks for cautious investors, it presents a compelling opportunity for growth-oriented investors willing to take on some risk.
See More
Nvidia Shares Surge 1180% Amid Strong AI Spending Forecasts
- Stock Performance: Nvidia's shares have surged 1180% since early 2023, currently priced at $187, with Wall Street analysts generally viewing the stock as undervalued, as the median target price of $250 implies a 33% upside.
- Market Share: Nvidia holds over 80% market share in AI accelerators, and its full-stack strategy allows it to capture 30% of total AI data center capital expenditures as profit, showcasing its formidable competitive position in AI infrastructure.
- Capex Forecast: AI hyperscaler capital expenditures are projected to reach $650 billion in 2026, significantly up from initial estimates of a 19% increase, now revised to 70%, which is positive news for Nvidia as it stands to gain a larger market share.
- Industry Trends: Companies like Alphabet, Amazon, Meta, and Microsoft have all indicated substantial increases in capital expenditures, forecasting $180 billion, $200 billion, $125 billion, and $140 billion respectively for 2026, highlighting that AI investments are driving growth across the industry.
See More
Amazon's Stock Underperforms but Long-Term Prospects Remain Positive
- Sales and Profit Growth: Amazon's sales reached $716.9 billion in 2025, with North America and international segments accounting for 82%, and while operating income was $34.7 billion, representing only 43% of total income, it still indicates stable growth potential.
- Cloud Computing Advantage: Amazon Web Services (AWS) achieved a 14.5% increase in operating income to $45.6 billion in 2025, leading the market with a 30% share, showcasing strong competitive advantages and future growth potential.
- Capital Expenditure Plans: Despite plans to increase capital expenditures to $200 billion in 2025, significantly higher than $131.8 billion, management believes this will yield substantial returns for shareholders, although it may impact cash flow in the short term.
- Increased Valuation Attractiveness: Amazon's price-to-earnings ratio has dropped from 40 to 28, and while still above the S&P 500's 30, the current valuation is more attractive compared to its 10-year average of 82, suggesting potential for higher returns for long-term investors.
See More
