Amazon.com, Inc. (AMZN): A Bull Case Theory

We came across a bullish thesis on Amazon.com, Inc. on CosmicCapital’s Substack’s Substack by CosmicCapital. In this article, we will summarize the bulls’ thesis on AMZN. Amazon.com, Inc.'s share was trading at $223.13 as of August 7^th. AMZN’s trailing and forward P/E were 34.01 and 34.36, respectively according to Yahoo Finance.

Amazon delivered a strong 2Q25 result, with group revenue accelerating to 13% YoY—above guidance—driven by record Prime Day sales and robust advertising growth, which jumped from 18% to 23%. Operating income rose 31% to $19.2 billion, also beating expectations. Margins expanded to 11.4%, reflecting the benefits of scale, operational enhancements, AI, and robotics. Core stores, advertising, and subscriptions all validated Amazon’s evolution into a higher-margin, more resilient business. Despite this, shares fell 8% as AWS's performance disappointed.

While Microsoft Azure and Google Cloud reported AI-driven reacceleration in growth, AWS lagged, raising concerns that Amazon may be losing ground in the AI race. Market sentiment has bucketed AWS as an AI laggard due to slower growth, lack of an exclusive leading LLM, and no major AI infrastructure partnership with OpenAI—unlike Azure or GCP. However, AWS remains deeply embedded with rising AI players like Anthropic, Perplexity, and Cursor. These platforms are earlier in their growth curves, and AWS stands to benefit as their inference needs scale. AWS’s focus is on cost leadership through custom silicon like Trainium chips, enabling more affordable training and inference versus Nvidia.

Over 500k Trainium2 chips now power Claude Opus 4, a key validation. AWS remains the largest cloud provider with high switching costs, deep enterprise integration, and a multi-model Bedrock platform, despite near-term margin pressure from stock comp and increased depreciation. Long-term, AWS is positioned to accelerate growth as capacity expands. With Amazon trading at 30x forward P/E while growing EBIT >20% CAGR, the risk/reward remains attractive despite near-term market skepticism.

Previously, we covered a bullish thesis on Amazon.com, Inc. by FluentInQuality in May 2025, which highlighted AWS, advertising, and logistics as key growth engines. The company's stock price has appreciated approximately 7% since our coverage, as the thesis played out. CosmicCapital shares a similar view but emphasizes AWS’s AI positioning and long-term opportunity despite near-term market concerns.

Amazon.com, Inc. is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 328 hedge fund portfolios held AMZN at the end of the first quarter which was 339 in the previous quarter. While we acknowledge the potential of AMZN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.