Is Amazon Stock Poised to Rally With AI Expansion in Cloud & Retail?

Amazon AMZN stock appears positioned for upward momentum as the company accelerates artificial intelligence deployment across its cloud and retail operations, transforming both revenue engines simultaneously.

The tech giant reported third-quarter revenues of $180.2 billion, marking 12% year-over-year growth, while Amazon Web Services achieved its strongest expansion in 11 quarters at 20.2%. This reacceleration signals robust enterprise demand for cloud infrastructure, particularly as businesses prioritize AI capabilities. Management projects capital expenditures of approximately $125 billion for 2025, with increases planned for 2026, underscoring aggressive investment in AI infrastructure to capture market share.

December's AWS re:Invent conference showcased breakthrough innovations positioning Amazon at the forefront of enterprise AI. The company unveiled Trainium3 chips delivering superior price-performance for AI workloads, alongside Project Rainier featuring nearly 500,000 Trainium2 chips. Amazon expanded its Nova model family with specialized AI capabilities, while introducing Nova Forge, enabling organizations to build custom models. The $38 billion OpenAI partnership further validates AWS infrastructure dominance. Frontier agents, including Kiro, an autonomous coding assistant and new AWS AI Factories, demonstrate Amazon's commitment to comprehensive AI solutions.

Retail operations simultaneously benefit from AI integration, with Rufus shopping assistant reaching 250 million active users who demonstrate 60% higher purchase completion rates. The Buy for Me agentic service expanded to more than 500,000 products, while seller-facing AI tools automate complex operations for Amazon's marketplace partners.

Fourth-quarter guidance projects revenues between $206 billion and $213 billion, reflecting 10-13% growth, suggesting sustained momentum from AI-driven initiatives across both business segments.

Alibaba and Google Match Cloud AI Momentum

Alibaba BABA and Alphabet GOOGL-owned Google demonstrate comparable AI-driven cloud expansion, with both achieving 34% year-over-year growth in their respective third-quarter 2025 periods. Alibaba Cloud generated 39.8 billion yuan in quarterly revenues, with AI-related products maintaining triple-digit growth for nine consecutive quarters. Google Cloud reported $15.2 billion in revenues with a $155 billion backlog, signing more billion-dollar deals in nine months than the previous two years combined. Alibaba plans to invest 380 billion yuan over three years in AI infrastructure, while Google expects $91 billion-$93 billion in capital expenditures for 2025 alone. Both Alibaba and Google report over 70% of existing customers adopting AI products, mirroring enterprise-wide AI integration patterns. Google attracted nearly 34% more new customers year over year, while Alibaba captured 35.8% of China's AI cloud market. The parallel growth trajectories suggest synchronized global enterprise AI adoption rather than market-share disruption among leading providers.

AMZN’s Share Price Performance, Valuation & Estimates

Amazon shares have returned 7.4% in the past six-month period compared with the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 5.6% and 4.7%, respectively.

AMZN’s 6-Month Price Performance

From a valuation standpoint, AMZN stock appears overvalued, trading at a forward 12-month price/earnings ratio of 29.16X, higher than the industry’s 23.99X. Amazon has a Value Score of C.

AMZN’s Valuation

The Zacks Consensus Estimate for AMZN’s 2025 earnings is pegged at $7.17 per share, which has seen an upward revision of 4.8% over the past 60 days. This indicates a 29.66% increase from the figure reported in the year-ago quarter.

Amazon.com, Inc. Price and Consensus

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

Amazon currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research