Wall Street Bets Big on Amazon’s 2026 Trajectory

Amazon is entering the new year with significant analyst backing, as multiple major Wall Street firms have named the tech giant a top pick for 2026. This bullish consensus emerges despite the company's relative stock market underperformance in 2025. The collective optimism centers on Amazon Web Services (AWS), its expanding advertising segment, and massive investments in artificial intelligence infrastructure.

The analyst community presents a remarkably cohesive outlook. Of the 67 firms covering Amazon, a striking 96% rate the shares as a Strong Buy or Buy. The average price target stands at $295, suggesting substantial upside from the recent closing price of $231.04. This level sits just below the 52-week high of $233.20 reached in early February.

Several institutions have elaborated on their high-conviction calls. Evercore ISI analyst Mark Mahaney sees approximately 50% upside potential, labeling Amazon a "high-quality growth compounder." He cites an estimated annual profit growth of 25%, double-digit revenue increases, expanding operating margins, and significantly rising free cash flow over the next two years as key drivers. His thesis hinges on a re-acceleration of AWS growth, rising demand for Amazon's proprietary Trainium AI chips, robust advertising revenue gains, and the launch of the revamped Alexa+ voice assistant.

TD Cowen has selected Amazon as its top mega-cap internet stock for 2026, identifying three primary catalysts: sustained acceleration in AWS growth, increased momentum in e-commerce and advertising, and margin improvements largely fueled by the ad business. The firm believes the advertising segment remains undervalued and notes that Prime Video, bolstered by live sports rights like Thursday Night Football and an NFL playoff game in January, could become a major engine for ad revenue.

JPMorgan analyst Doug Anmuth points to around 30% upside, highlighting Amazon's $38 billion, seven-year cloud agreement with OpenAI as a potential additional growth booster. He describes the company as the "most broadly diversified mega-cap" across revenues and profits, with multiple large growth vectors, mixed investor sentiment, and a valuation that appears attractive compared to its own history.

2025's Market Disconnect

Despite these operational strengths, 2025 proved a challenging year for Amazon's stock performance. Shares gained only about 6% through December, significantly trailing the S&P 500's approximate 18% return and lagging behind other members of the "Magnificent Seven" tech cohort.

Market concerns primarily focused on the possibility of Microsoft's Azure and Google Cloud outpacing AWS in growth rates. Additional pressure came from tariff-related impacts on retail margins, which squeezed the core e-commerce business.

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

A potential turning point occurred in the third quarter of 2025. AWS revenue growth re-accelerated to 20% year-over-year, its fastest pace since 2022. The cloud division generated $33 billion, accounting for 18% of the company's total revenue of $180 billion but delivering 65% of its operating income. Simultaneously, advertising revenue grew 22% compared to the same period last year.

From a valuation perspective, the company appears more modestly priced historically. Its forward price-to-earnings ratio is 28.9, well below its five-year average of 44.3. Furthermore, AWS maintains a substantial backlog of $200 billion in commitments, providing a solid foundation for future expansion.

Infrastructure and Logistics at Scale

Alongside positive analyst commentary, Amazon is aggressively advancing its infrastructure offensive. The company plans to double its data center capacity by 2027. Investments in the first nine months of 2025 alone reached $92 billion, up from $55 billion in the prior-year period. A key constraint for further expansion remains the availability of electrical power.

Within its core e-commerce operation, the company is increasingly competing on speed. Same-day delivery of perishable goods is now available in over 2,300 U.S. cities, with further expansion planned for 2026. The offer of free same-day grocery delivery on orders over $25 underscores its ambition to compete more directly with Walmart in the grocery sector.

Not every innovation has proceeded smoothly. On December 28, Amazon announced it would halt commercial drone deliveries in Italy, citing unfavorable regulatory conditions. The company reaffirmed its commitment to drone projects in the U.S. and U.K., however, where the service has expanded to cities including Waco, San Antonio, and Pontiac.

The Road Ahead

The next major milestone will be the release of fourth-quarter 2025 results, scheduled for January 29, 2026. Market consensus forecasts earnings per share of $1.95, up from $1.86 in the year-ago quarter. A critical factor for Amazon's 2026 valuation will be its ability to bring new AI infrastructure online rapidly enough to meet enterprise demand while sustaining AWS growth consistently above the 20% mark.