Bullish investors are increasingly betting on U.S. tech behemoth Amazon.com (AMZN.US), anticipating that its stock price will re-establish its dominance in cloud computing growth and its leadership role in the U.S. stock market bull run, following years of underperformance compared to large-cap tech peers like Google, Microsoft, and Nvidia. This recently intensifying optimistic sentiment stems from institutional investors growing more confident that Amazon's cloud platform, AWS, can achieve a robust growth trajectory reminiscent of the enterprise cloud computing wave over a decade ago. They believe AWS, the global market share leader in cloud platforms, stands to benefit immensely from exploding demand for cloud-based AI inference computing power and comprehensive AI developer platform ecosystems. Furthermore, investors argue that transformative AI technology will also bolster the company's more familiar e-commerce business by enabling more precise ad targeting and enhancing the efficiency of its vast logistics operations network. "The powerful improvements driven by AWS will substantially boost investor perception, particularly regarding the impression that this tech stock is a relative 'laggard' in cloud computing and AI computing power," said Pat Burton, a portfolio manager at Winslow Capital Management. He personally considers Amazon one of his largest, long-term overweight positions among the "Magnificent Seven" tech giants. Throughout 2025, Amazon's stock was the worst performer among the "Magnificent Seven" and had underperformed this peer group for seven consecutive years. The stock gained a mere 5% for the year, significantly trailing the Nasdaq 100 index's continued bull market surge of approximately 20%. The situation has shown some reversal early in 2026; despite a 3.4% drop on Tuesday, Amazon's stock remains slightly up year-to-date. While most other "Magnificent Seven" stocks have seen substantial pullbacks since the start of the year, Amazon's performance is second only to Google-parent Alphabet Inc. (GOOGL.US).
As illustrated in the chart above, Amazon's stock underperformed the broader U.S. market last year—and also lagged behind the "Magnificent Seven" benchmark index. The so-called "Magnificent Seven" (Mag 7)—comprising Apple, Microsoft, Google, Tesla, Nvidia, Amazon, and Meta Platforms (Facebook's parent)—hold significant weightings (collectively around 35%) in the S&P 500 and Nasdaq 100 indices. They are the core drivers behind the S&P 500 repeatedly hitting new highs and are viewed by top Wall Street investment firms as the portfolio most capable of delivering substantial returns amidst the largest technological shift since the internet era. Across the entire U.S. stock market, these heavily weighted "Magnificent Seven" tech giants have been the primary force leading and driving the long-term bull market since 2023. Their exceptionally strong revenues fueled by AI investments, rock-solid fundamentals, consistently robust free cash flow reserves over many years, and expanding stock buyback programs have attracted a flood of global capital.
Is the wave of AI applications fully arriving, marking a breakout moment for Amazon's AWS? Since the beginning of the year, as global enterprise and consumer demand for practical AI applications—such as generative AI software, AI search, AI recommendations, and AI agents—has surged and begun large-scale deployment, Wall Street analysts have grown increasingly optimistic that Amazon will achieve stronger growth curves in both its e-commerce and cloud computing (AWS) businesses. They particularly anticipate that AWS revenue and operating profit growth could reach robust levels of 40% or more under the AI mega-trend, comparable to the explosive growth period of cloud computing around 2015. Following Google's major launch of the Gemini 3 AI application ecosystem in late November, this cutting-edge AI software quickly gained global popularity, causing a sudden spike in demand for Google's AI computing power. The immediate release of the Gemini 3 series products generated an enormous volume of AI token processing, forcing Google to significantly reduce free access tiers for Gemini 3 Pro and Nano Banana Pro and impose temporary limits even for Pro subscribers. Coupled with recent South Korean trade export data indicating持续强劲 demand for HBM memory systems and enterprise-grade SSDs, this further validates Wall Street's narrative of an "accelerating AI application penetration phase" and that the "AI fervor remains in the early infrastructure build-out stage characterized by supply struggling to meet demand." Reinforcing this, MongoDB (MDB.US), a database software developer and key participant in the "Google AI ecosystem chain" providing database platform services on Google Cloud, recently reported revenue and profits that comprehensively beat expectations and raised its full-year outlook. This echoes Google's recently announced larger-scale AI capital expenditures and stronger-growing cloud computing revenue, collectively highlighting that major cloud providers like Google, Microsoft, and Amazon continue to operate in a super-high景气区间 for both AI computing infrastructure construction and demand for AI developer ecosystem platforms and cloud-based AI inference computing power on the application side. This year, the advancement of the Gemini 3 series (with ongoing expansion for ecosystems/applications) and the explosive popularity of Claude in "programming/Agent-style usage" have indeed accelerated the deployment of generative AI at both the enterprise level (business processes, development, customer service, analytics) and consumer level (AI search/recommendations/consumer agents). This objectively shifts computing demand further from "training" towards broader inference and online services, thereby significantly elevating the景气度 trajectory for global cloud IaaS infrastructure (AI GPU/AI ASIC accelerators, networking, storage, large-scale data engineering) and comprehensive cloud PaaS AI developer ecosystem platforms.
Against this backdrop, Wall Street's logic for being more bullish on Amazon's "E-commerce + AWS" combination following a strong growth path similar to Nvidia's appears smoother: Particularly on the AWS cloud side, signs of re-accelerating growth have emerged (e.g., Q3 2025 AWS sales up 20% year-over-year), and securing a long-term mega-deal with OpenAI (reportedly around $40 billion) has strengthened visibility for "cloud infrastructure and AI cloud inference demand." Simultaneously, the market is trading on the AI computing bull narrative of "Amazon's AWS Trainium self-developed AI ASIC computing clusters seeing broader adoption" (including previously reported media speculation about OpenAI potentially introducing Trainium). Amazon's AWS holds a commanding market share lead in cloud computing, which also means the AI application development ecosystem it launched—Amazon Bedrock—continues to attract a massive enterprise customer base seeking a low technical barrier for一站式 developing various AI applications. Amazon, along with Microsoft and Google, the three cloud computing leaders, is fully focused on building B2B and B2C application developer ecosystems related to generative AI. Their aim is to drastically lower the technical threshold for non-IT professionals across industries to develop AI applications while providing powerful cloud-based AI computing platforms, especially cloud-based AI inference computing resources.
Its valuation is relatively cheap compared to other giants. Years of stock price underperformance have made its valuation relatively inexpensive—at least from a historical perspective. Amazon currently trades at about 24 times expected earnings for the next 12 months (a 24x forward P/E ratio), which is lower than Apple Inc. (AAPL.US), Microsoft Corporation (MSFT.US), and Google-parent Alphabet (GOOGL.US), and significantly below its five-year average forward P/E of 36x. Some Wall Street veterans point to Alphabet's astonishing stock price rebound in 2025 as the most typical blueprint that Amazon could potentially replicate. In past years, Google's parent was seen as a typical "loser" in the AI race, with its stock performance significantly lagging behind Amazon and the "Magnificent Seven" benchmark in 2023 and 2024. Around this time last year, its stock price and valuation were the cheapest among this group of super-cap tech giants. Subsequently, Alphabet's search and cloud giant Google released a new version of its Gemini large language model on March 25th last year. As market口碑 spread regarding its stronger AI application capabilities, its stock price took off. Since then, the stock (Alphabet) has skyrocketed approximately 89%, not only far surpassing other tech giants in the "Magnificent Seven," including Nvidia, but also placing it among the top 25 gainers in the S&P 500 during that 2025 period. This year, Alphabet's market capitalization successively overtook Apple and Microsoft; the Google parent now holds the position of the world's second-largest company by market cap, at approximately $3.89 trillion, trailing only the "AI chip superpower" Nvidia (NVDA.US).
It looks like Google did about 18 months ago. Now, a growing number of investors are viewing Amazon as the next large-cap tech stock potentially poised to capture this AI super-cycle. "It looks a lot like Google, the cloud and search leader, about 18 months ago before its stock price truly exploded," said Nancy Tengler, CEO and Chief Investment Officer of Laffer Tengler Investments. "In this sector, changes in growth and bull market sentiment can happen very quickly." Market sentiment is already shifting in this direction. AWS reported its strongest growth rate in years during the company's most recent earnings release (announced in October). Subsequently, Amazon secured a heavyweight deal worth approximately $40 billion to provide computing resources for OpenAI. Furthermore, last month, media reports indicated that OpenAI is in talks with Amazon for at least $10 billion in funding and suggested the potential use of Amazon's self-developed Trainium AI ASIC computing clusters. A major developer conference last December was seen as further highlighting market confidence in the company's AWS cloud business and its emerging AI semiconductor business. "For most of 2025, Amazon has been battling a narrative that AWS had fallen behind Google and Microsoft," wrote Brian White, an analyst at Monness Crespi Hardt & Co., in a report dated December 22nd. "However, Amazon has completely reversed this negative narrative with strong results and OpenAI-related developments." He rates Amazon's stock as a "Buy"; a Bloomberg survey shows a striking 95% of covering Wall Street analysts also assign an equivalent "Buy" rating.
Wall Street analysts expect Amazon's overall profitability to strengthen, driven by AWS's increasingly robust profit margins. Data compiled by Bloomberg shows that while analysts project annual revenue growth of around 11%, they also forecast Amazon's earnings per share to grow nearly 12% in 2026, with a potential further increase of 22% in 2027. Analysts anticipate Amazon's operating profit will grow about 26% this year and about 24% next year. Wall Street's profit expectations for Amazon are also turning more optimistic. Over the past six months, the consensus estimate for the company's 2026 net profit has been revised upwards by 8.2%, while revenue expectations for the same period have been raised by 4.2%. "This is the AI computing play that hasn't received enough 'love' yet," said Clayton Allison, a portfolio manager at Prime Capital Financial Advisors, which holds Amazon stock. "Unlike some of those high-flying, richly valued AI bubble companies, Amazon has built the AI computing infrastructure that everyone can and wants to use. It's also an e-commerce giant, and it's trading at a valuation discount."
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