Amazon: AWS, AI Chips, & Retail Expansion Spur Growth

Amazon Company Overview

Zacks Rank #3 (Hold) Amazon (AMZN) is the leading e-commerce company, with operating sprawling across North America and the globe. The company’s online retail business revolves around the Prime program and a vast and efficient distribution network which delivered its fastest delivery speeds in 2025. Moreover, Amazon established a footprint in the physical grocery business with its Whole Foods Market acquisition. Additionally, Amazon enjoys a dominant position in the cloud computing market, particularly in the Infrastructure as a Service (IaaS) space, thanks to Amazon Web Services (AWS), which is one of its high-margin generating businesses. Amazon has also diversified into the custom AI chip business, and its Trainium and Graviton chips now produce a combined annual revenue run rate of more then $10 billion.

Amazon’s International Expansion Supports Growth

After gaining a dominant position in the North American e-commerce market, Amazon is applying its winning blueprint internationally. Amazon is investing in cross-border logistics, faster delivery networks and localized marketplace features across Europe, Asia, and Latin America, positioning it to capitalize on areas where digital retail penetration remains comparatively low.

Amazon Has a Durable Business

Although most investors think of the e-commerce business when they think of Amazon, the company has successfully diversified its revenue stream across several high-growth businesses. For example, in Q3, AWS sales increased 39% year-over-year while retail grew 6% and advertising grew 10.9%. Meanwhile, Amazon gross margins jumped to 51.4%, its highest level ever.

Amazon Benefits from the AI Boom

According to the latest guidance, big tech capital expenditures are expected to soar to $1.4 trillion in 2027 (+60% YoY).

As a primary supplier of AI infrastructure to enterprise customers, Amazon will benefit dramatically from the rampant AI spending. Meanwhile, management noted that commitments for custom chips exploded 20-fold year-over-year.

Amazon Delivers Dependable Growth

While many stocks can deliver the occasional double-digit revenue growth quarter or year, Amazon has done it consistently. Revenues have grown each year over the past 5 years and are expected to be close to $1 trillion next year.

Amazon Technical View

Last week, Amazon staged a classic high-volume bear trap/shakeout after briefly crashing below the 200-day moving average and recovering it.

Bottom Line

Amazon's dominant market presence across cloud computing, global e-commerce, and emerging AI infrastructure positions it as a resilient long-term growth driver. Supported by high-margin revenue from AWS, massive enterprise demand for custom Trainium and Graviton silicon, and an efficient international logistics footprint, the company continues to demonstrate strong fundamental performance and operational expanding margins.

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