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Amazon's AI Features Boost Shopping: More Upside for Ecommerce Giant?

By Vasundhara Sawalka | September 03, 2025, 10:06 AM

Amazon's AMZN aggressive push into AI-powered shopping experiences is reshaping its ecommerce platform, potentially unlocking new growth avenues for the retail behemoth. The company's latest innovation, Lens Live, launched this week for tens of millions of iOS users, enabling real-time product matching through mobile cameras while integrating with Rufus, Amazon's AI shopping assistant that analyzes billions of products instantaneously.

The AI shopping momentum arrives as Amazon reported robust second-quarter 2025 results, with revenues climbing 13% year over year to $167.7 billion, surpassing expectations. Notably, advertising revenues surged 23% to $15.69 billion, demonstrating how AI-enhanced product discovery drives monetization.

These AI capabilities extend beyond visual search. Amazon's Interests feature uses conversational language to curate personalized product selections, while Hear the Highlights synthesizes reviews into audio summaries. The experimental Buy for Me feature ventures further, using agentic AI to purchase items from third-party sites when Amazon lacks inventory, potentially capturing additional ecommerce market share.

The company's online stores unit generated $61.5 billion, up 11% year over year. For the third quarter, our model estimate for online stores revenues is pegged at $66.3 billion, suggesting an increase of 8% year over year.

The investment appears justified as Amazon commits up to $100 billion in capital expenditures for 2025, primarily for AI infrastructure. With operating income reaching $19.2 billion in the second quarter, up from $14.7 billion year over year, the company maintains financial flexibility to fund these innovations. As competitors Microsoft Azure and Google Cloud accelerate their AI offerings, Amazon's consumer-facing AI tools could differentiate its retail business while AWS faces intensifying cloud competition.

Rivals Race to Match AI Shopping Innovation

While Amazon advances its AI shopping tools, competitors Walmart WMT and Alibaba BABA are pursuing similar strategies with varying success. Walmart recently expanded its AI-powered search capabilities and virtual assistant features, though Walmart's implementation remains primarily text-based, lacking the visual recognition sophistication of Amazon's Lens Live. Walmart's ecommerce revenue growth of approximately 21% suggests these investments are gaining traction.

Meanwhile, Alibaba has deployed AI shopping assistants across its Taobao and Tmall platforms, with Alibaba's cloud division developing proprietary models for personalized recommendations. Alibaba's approach emphasizes social commerce integration, differentiating from Amazon's product-discovery focus. However, both Walmart and Alibaba trail Amazon's scale of AI investment, highlighting the capital-intensive nature of these technological transformations.

AMZN’s Share Price Performance, Valuation & Estimates

AMZN shares have gained 2.7% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 12% and 8.1%, respectively.

AMZN’s YTD Price Performance

Zacks Investment Research

Image Source: Zacks Investment Research

From a valuation standpoint, AMZN stock appears overvalued, trading at a forward 12-month Price/Sales ratio of 3.18X, higher than the industry’s 2.3X. AMZN has a Value Score of D.

AMZN’s Valuation

Zacks Investment Research

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for AMZN’s 2025 earnings is pegged at $6.73 per share, up by 1.2% over the past 30 days. This indicates a 21.7% increase from the figure reported in the year-ago quarter.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Amazon stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Walmart Inc. (WMT): Free Stock Analysis Report
 
Alibaba Group Holding Limited (BABA): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

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