Amazon's Lagging: Risk or Opportunity for Investors?

Amazon's Competitiveness and Market Perception

While the "Magnificent Seven" stocks in the technology sector provided significant returns to investors in 2025, Amazon (AMZN) notably exhibited a more horizontal performance. Year-to-date, AMZN shares gained only 0.8%, making it one of the weakest performers among major tech companies. This situation is influenced by concerns over Amazon Web Services' (AWS) growth potential and uncertainties regarding its artificial intelligence strategy.

Competitors' Rapid Growth

Rivals such as Microsoft Azure and Google Cloud have achieved growth gradients far exceeding Amazon's in the cloud services market. Although AWS recorded a 17.5% revenue increase for the second quarter, competitors' growth rates above 30% are causing concern among investors. Despite still being the market leader with annual revenues of $123 billion, the slowdown in its growth rate negatively affects investor perception.

Investor Uncertainty and Stock Performance

Investor uncertainty deepens as Amazon's CEO, Andy Jassy, has been reluctant to present a clear AWS roadmap. Aggressive moves by rivals like Walmart in pricing and logistics within e-commerce are challenging Amazon's growth narrative. Furthermore, a $2.5 billion dispute settlement with the Federal Trade Commission reinforces the negative sentiment around the stock.

Regaining Growth Potential

AWS's future growth is critically important. Amazon's AI investments and its collaboration with Anthropic are among the key factors expected to support AWS's growth. Wells Fargo analysts predict this collaboration will contribute 7 percentage points to AWS revenue growth in 2026. Additionally, Amazon's supercluster project and new data center investments are being implemented to develop AI-focused solutions.

AI and Operational Efficiency

Amazon's artificial intelligence applications are not limited to AWS; they enhance efficiency across a wide range of services, from Alexa to e-commerce operations. More AI-powered robots are now being used, optimizing both storage and logistics processes. Amazon's Bedrock platform provides developers with access to high-quality machine learning models.

Valuation and Catalysts

Amazon's stock is trading at a forward P/E ratio of 32. While this ratio appears high compared to the S&P 500's ratio of 25, it can be considered reasonable given expectations for double-digit profit growth. 42 analysts have a consensus "BUY" rating for the stock, with Wells Fargo's target price of $280 being significantly above the current market price.

In conclusion, while Amazon's stock appears stagnant in the short term, it holds a strong long-term growth story thanks to AI investments and AWS performance updates. Investors should turn their attention to Amazon for another opportunity.