Amazon Poised For Big 2026 Breakout, Says Analyst

Core Insights - Amazon.com, Inc is experiencing strong momentum in its retail business and significant growth in its AWS cloud division, driven by increasing demand for AI services [1] - The company is well-positioned for continued growth and improved profitability due to a healthy retail division, accelerating AI demand, and a rapidly expanding advertising business [1] E-commerce and Retail Strength - The core retail business is supported by positive consumer spending sentiment, with strong results from Prime Day and the Prime Big Deal Days indicating ongoing momentum [4] - Despite competition from platforms like Temu, Shein, and TikTok Shop, Amazon remains relatively insulated among incumbent e-commerce platforms [5] AWS and AI Acceleration - Investor concerns about AWS's growth relative to competitors are acknowledged, but optimism remains due to strong underlying demand reflected in backlog growth and increased capital expenditure guidance [6] - AWS's AI business is growing at a triple-digit rate, with a strategic partnership with AI startup Anthropic expected to significantly contribute to revenue growth in 2025 and 2026 [6] High-Margin Business Mix - The rapidly expanding advertising business is identified as a key growth pillar, with a clear path to sustainable margin improvement driven by a shift towards AWS and advertising, optimizations in the fulfillment network, and increased automation [7] Financial Projections - The company is projected to exceed operating income expectations, with third-quarter revenue estimated at $179.37 billion (up from $177.84 billion) and EPS at $1.57 (up from $1.45) [8]