Amazon’s share price rose roughly 5% last year, underperforming the broader market’s 16% gain. Despite this, the company reported strong results across its core businesses. In particular, growth in advertising services, cloud computing and subscription offerings all reached or tied recent highs in the third quarter. Investors now see 2026 as a potential inflection point, betting that sustained revenue momentum and margin expansion could drive a market-beating rebound.

Amazon Web Services, the world’s largest cloud provider, generated a 35% operating margin in Q3, contributing two-thirds of the company’s operating profits while accounting for under 20% of total revenue. Advertising services, the company’s fourth-largest revenue stream, grew 24% year-over-year to become another high-margin engine. Together, these two divisions underpin Amazon’s ability to deliver outsized profit growth even as its e-commerce business operates at single-digit margins.

Over the trailing 12-month period ending in Q3, Amazon’s capital expenditures climbed from $54 billion to nearly $116 billion, outpacing free cash flow declines from $53 billion to $15 billion. Management is deploying this investment into data center construction, network build-outs and development of proprietary AI chips such as the latest Trainium generation. These initiatives aim to secure long-term leadership in cloud-based AI infrastructure and support greater automation across the retail fulfilment network.

Consensus estimates call for mid-teens annual earnings-per-share growth through 2027, driven by continued leverage in AWS and advertising. Trading at roughly 29 times forward earnings, Amazon’s multiple sits below many high-growth peers, reflecting near-term e-commerce headwinds but also leaving room for upside if cloud and ad segments exceed forecasts. For investors focused on durable revenue streams and expanding margins, the current valuation offers an attractive entry point for 2026.