Is Amazon Ads Set to Grow Even Bigger Through 2025 and Beyond?

Amazon’s AMZN Ads helps brands connect with customers across many platforms, including Prime Video, Twitch, IMDb, live sports like the NFL and NBA, Amazon Music and popular sites like Pinterest and BuzzFeed. It also offers tools for measuring how ads perform, using features like Amazon DSP and secure data rooms.

In a recent update, Amazon launched a new AI-powered video generator. This tool creates realistic, high-motion videos to show products in use, giving shoppers a better idea of what they’re buying before they make a purchase.

Amazon said its ad business is doing well because it helps brands grow and reach people both inside and outside its own stores. It also said there’s still a lot of room to improve its ad tools and help advertisers get even better results.

AMZN’s advertising business saw strong growth in the first quarter of 2025, bringing in $13.9 billion in revenues, up 19% from the same time last year. Advertising services contributed 8.9% of the company’s total revenues in the quarter. The company said this growth came from more brands using its full range of ad services, which now reach more than 275 million ad-supported users in the United States alone.

With strong results and new tools like the AI video maker, Amazon is aiming to make its ad platform more useful for brands of all sizes.

Amazon Faces Stiff Competition in The Ad Space

Amazon Ads competes directly with Meta Platforms META and Alphabet GOOGL in the digital advertising space. 

Meta leads in social media advertising across Facebook, Instagram and WhatsApp, with its ad business rebounding strongly in early 2025. Alphabet dominates with Google Search and YouTube, which together drive massive ad spend across search and video. 

As Meta and Alphabet focus on improving ad tools with AI, Amazon is also adding AI features, like a new video generator that shows products in use. It stands out by using shopping data to deliver relevant ads and expand its reach.

AMZN’s Share Price Performance, Valuation and Estimates

AMZN shares have lost 3% in the year-to-date (YTD) period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 4.3% and 1.5%, respectively.

AMZN’s YTD Price Performance

From a valuation standpoint, AMZN stock is currently trading at a forward 12-month Price/Sales ratio of 3.13X compared with the industry’s 1.98X. AMZN has a Value Score of D.

AMZN Valuation

The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at $1.34 per share, which has remained steady over the past 30 days, indicating 8.94% year-over-year growth.

Amazon.com, Inc. Price and Consensus

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

The consensus mark for 2025 earnings is pegged at $6.31 per share, which has been revised upward by a penny over the past 30 days. The estimate indicates 14.1% year-over-year growth.

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

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

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