Amazon underperformed the broader market in 2025 despite solid operational trends. The S&P 500 rose 16.4% last year, while Amazon trailed due to a rich valuation at the start of the year that evaporated over subsequent months. After entering 2025 with a premium multiple versus peers, the stock now trades in line with other large technology companies. Investors remain optimistic: the company reported revenue growth in its North American segment of 11% in Q3 and an adjusted operating income gain of 28%, suggesting underlying momentum that could fuel a rebound in 2026.

In 2025, Amazon guided for approximately $125 billion in capital expenditures—the highest in its history and one of the largest annual capex budgets globally. The bulk of this spending fueled expansion of Amazon Web Services (AWS) data centers, development of custom AI chips to reduce reliance on third-party suppliers, and acquisition of power generation assets to support massive electricity demands. AWS grew revenue 20% year-over-year in Q3 and carries a backlog in excess of $200 billion. In November, Amazon struck a $38 billion, multi-year agreement to provide OpenAI with processing power and access to AI accelerator clusters.

Amazon’s market capitalization stands near $2.5 trillion, with the stock trading at roughly 25 times forward earnings estimates for 2026—below its five-year average and below retail peers such as Walmart and Costco. Redburn Partners has set a near-term price target of $230, slightly below recent trading levels, indicating limited upside from current valuations. Conversely, a consensus of Wall Street analysts assigns the stock a “Strong Buy” rating, with price targets ranging from the mid-$260s up to $350, implying potential upside of 15%–40% over the next twelve months.