After gaining just 5% in 2025—well behind the S&P 500’s 16% advance—Amazon’s shares jumped more than 6.7% in early 2026. That performance effectively eclipses last year’s total gain and underscores the disconnect between the stock’s price action and the company’s underlying fundamentals. Investor interest has reignited as market participants reassess Amazon’s long-term growth drivers across e-commerce, cloud and AI, suggesting the current valuation may not fully reflect the company’s momentum.

Amazon has delivered a string of upside surprises on profitability. In its most recent quarter, earnings per share of $1.95 exceeded consensus by nearly 25%, marking a year-over-year increase of more than 36%. Earlier results also outperformed, with EPS up over 60% in Q1 and more than 33% in Q2. Consensus estimates for the current period match the prior quarter’s actual EPS, indicating conservative Wall Street forecasts and leaving room for another potential upside shock when results are released.

Amazon Web Services, the company’s highest-margin segment, has shown signs of renewed strength. Sales growth accelerated from 17% in the first half of 2025 to roughly 20% in Q3, and analysts expect this pace to pick up further in 2026. Key customer wins—including an expanded AI compute partnership with a leading autonomous-driving developer—highlight AWS’s position as the go-to platform for enterprise AI workloads. As businesses shift from model training to large-scale AI deployment, AWS’s infrastructure depth and entrenched customer relationships provide a durable competitive edge.

While AWS captures most of the spotlight, Amazon’s advertising arm is quietly generating robust growth with far higher margins than retail. Third-quarter ad revenue rose 24% year-over-year to $17.7 billion, driven by enhancements in personalization, product discovery and recommendation tools. With consumer ad conversion rates climbing, brands are paying more for placements, and the segment’s expansion can meaningfully lift overall profitability—even if consumer spending in other areas remains uneven.