Amazon’s Strategic AI Bet Positions Shares for a Strong 2026

As 2025 draws to a close, Amazon is sending a powerful message to its competitors. After lagging behind its peers in the "Magnificent Seven" cohort for much of the year, the technology giant is generating fresh momentum. This shift is fueled by reports of a major planned investment in OpenAI and a prominent analyst upgrade, suggesting the company is strategically repositioning itself for the year ahead.

This strategic pivot is gaining traction on Wall Street. Mark Mahaney, an analyst at Evercore ISI, has recently designated Amazon as his "Top Pick" among large-cap internet stocks for 2026. This endorsement highlights a broader change in market sentiment. Concerns over the company's substantial capital expenditures (CapEx) throughout 2025 are beginning to recede. Investor focus is now transitioning toward the anticipated revenue acceleration expected from these newly built capacities. A key indicator of this shift is the performance of Amazon Web Services (AWS), which has recently resumed a 20% revenue growth rate, signaling that previous constraints have likely been overcome.

A Major AI Partnership Takes Center Stage

The primary catalyst for the stock's movement in the final trading sessions of the year is a significantly deepened partnership with AI leader OpenAI. According to market reports, Amazon is in discussions to invest up to $10 billion in the developer of ChatGPT. This potential investment would build upon an existing $38 billion commercial agreement between the two companies, which already encompasses cloud services via AWS and the utilization of Amazon's proprietary Trainium chips.

This move serves a dual strategic purpose. It solidifies Amazon's role as a critical infrastructure partner in the AI ecosystem while directly challenging Microsoft's current dominance in AI models. Furthermore, an increased reliance on its own custom silicon could reduce dependence on expensive Nvidia hardware, potentially improving long-term operating margins.

Should investors sell immediately? Or is it worth buying Amazon?

Playing Catch-Up After a Year of Investment

A review of the share price performance underscores Amazon's potential for catch-up growth. While the S&P 500 and many technology rivals delivered double-digit returns, Amazon's year-to-date (YTD) gain stands at just 7.75%. The stock currently trades at $231.24, remaining slightly below its 52-week high of $233.20.

For Amazon, 2025 has largely been a "build-out phase," characterized by heavy spending on data center infrastructure, which pressured margins and weighed on investor sentiment. The OpenAI deal and the scaling of its in-house chip technology suggest this period of intensive investment may soon start yielding tangible returns.

The Road Ahead: Key Metrics to Watch

The next critical milestone for investors will be the fourth-quarter earnings report, expected in late January. Analysts have established an average price target of approximately $295, implying significant upside potential. A crucial factor for the stock's future trajectory will be whether AWS can maintain or even expand its operating margin while successfully integrating new, demanding AI workloads.