Analyst Says Amazon.com (AMZN) Stock Rebound Coming Soon - Here's Why

We recently published 10 Trending Stocks This Week. Amazon.com, Inc. (NASDAQ:AMZN) is one of the trending stocks this week.

Frances Stacy from Scarlet Oak Financial said in a program on Schwab Network on Oct. 7 that Amazon has been lagging behind peers in “AI participation.” However, the analyst believes the stock has more room to run.

“Amazon is kind of old faithful when you talk about traditional cloud services, but it’s been a bit of a laggard in the AI participation. Its investment in Anthropic has been significant. Obviously, they’ve done a deal with IBM, and that’s huge, and Claude is growing in its market share. The fact that Anthropic is kind of making some noise and Amazon is investing in that is bringing Amazon into that sort of up-and-coming AI conversation. So Amazon’s stock price has been kind of trading based on more traditional metrics and hasn’t been part of the AI bubble, but now I think it has an opportunity to catch up. And just looking at the chart here, we’ve been a bit rangebound between 216 and 224, trading at 222 right now. I think that if we can hold these higher lows here and we can particularly hold the August 4th low, I think that Amazon’s got some room to run as an AI play that might be a bit discounted.”

Amazon shares are down 3% so far this year and have underperformed major tech stocks. Why? Two major factors are impacting the stock. Tariff-related headwinds and weakening consumer buying power have been an overhang for the company’s e-commerce business. But more than that, Wall Street has been spooked by a relative slowdown in the company’s Cloud business. In the second quarter, AWS grew 17.5%, a deceleration compared to the previous few quarters. In the same period, Microsoft Azure grew 26% and Google Cloud rose 32%.

What’s ailing AWS? The cloud market is undergoing a structural shift amid the AI wave.

AWS has always been focused on infrastructure (IaaS), allowing customers to build their own applications with flexibility. However, companies are now preferring AI-first cloud platforms with strong integration with generative models. This helps Microsoft (OpenAI) and Google (Gemini) because of their strong AI and app ecosystems.

Mairs & Power Balanced Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter 2025 investor letter:

“The Fund also started a new position in Amazon.com, Inc. (NASDAQ:AMZN) in the second quarter, where the company is well positioned to continue capturing market share in retail while also growing its market leading cloud business. The Fund took advantage of weakness in the stock during April to start the position as tariff news and a precipitous market decline provided an opportunity to build a position.”

While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.