Amazon Stock Forecast 2026: After a 6% Slump, Can AWS and Ads Power a Rebound?
After a disappointing 2025 with only 6% growth, Amazon stock is targeting a 2026 rebound. Key drivers include AWS's reaccelerated growth and a burgeoning ad business, but the biggest challenge lies in securing power for its AI infrastructure expansion.
After a year of disappointing investors, Amazon looks poised to turn the page in 2026. The tech giant, which struggled through 2025 amid worries about cloud growth and tariff impacts, is now showing signs of a potential comeback.
Throughout 2025, Amazon (AMZN) shares gained only 6%, significantly trailing the S&P 500's nearly 18% gain and underperforming its mega-cap tech peers. Wall Street was concerned that Microsoft's Azure and Google Cloud were outpacing the growth of Amazon Web Services (AWS), while potential tariffs under President Donald Trump threatened to squeeze already-thin retail margins.
Signs of a Turnaround: AWS Reaccelerates
However, Amazon may have turned a corner in the third quarter of 2025. According to the CNBC Investing Club, AWS revenue growth reaccelerated to 20%, its fastest pace since 2022. This is a central reason why some see the stock as poised for a bounce in 2026.
Analysts are also expressing renewed confidence. TD Cowen named Amazon its top mega-cap internet pick for 2026, citing three key drivers: sustained AWS growth, strengthening e-commerce and advertising momentum, and ongoing margin expansion from its ad business.
The Hidden Growth Engines: Ads and Retail
The advertising business, in particular, is seen as an "underappreciated" bright spot. Already one of the company's highest-margin segments, analysts expect it to get an even bigger lift from Prime Video. With an expanding slate of live sports rights, including 'Thursday Night Football,' TD Cowen argues Prime Video could become a key driver of Amazon's ad revenue in the coming years.
On the retail side, Amazon continues to enhance its Prime membership with faster delivery. Same-day delivery now reaches more than 2,300 cities, with more expansion planned for 2026. The introduction of free same-day grocery delivery on orders over $25 pushes Amazon incrementally closer to its rival, Walmart.
The Core Challenge for 2026: AI and Power
Still, the biggest determinant of Amazon's comeback remains its profit engine: the cloud computing business. The core investor question for 2026 is whether Amazon can bring AI infrastructure online fast enough to meet surging demand.
Amazon has announced plans to double its data center capacity by 2027, but this expansion hinges on solving power availability. If the company can demonstrate consistent capacity, maintain AWS's growth momentum, and continue expanding its ads and retail efficiency, 2026 could mark a meaningful stock recovery.
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