Is Amazon the Best Mag 7 AI Stock to Buy Before Earnings?

Core Insights - The stock market is experiencing a boom driven by artificial intelligence stocks, with the Nasdaq and S&P 500 reaching new all-time highs as the third-quarter earnings season progresses [1] Group 1: Amazon's Position and Performance - Amazon operates the world's largest cloud-computing business, AWS, which holds approximately 30% of the global cloud infrastructure market, outperforming Microsoft and Alphabet [3] - Amazon is integrating AI across its business to innovate, reduce costs, and enhance customer experiences, while also expanding its Prime business into streaming [9] - Amazon's earnings per share (EPS) grew by 91% last year, with projections of 24% growth in 2025 and 12% in FY26, reaching $7.67 per share from $2.90 in 2023 [10] Group 2: Earnings Outlook and Market Sentiment - Amazon is ranked 1 (Strong Buy) by Zacks ahead of its Q3 earnings report, with a strong growth outlook and trading 20% below its Zacks price target [6][12] - The company has beaten EPS estimates by an average of 23% over the past four quarters, with expected sales growth of about 11% this year and next, reaching $783 billion in 2026 [12] - Wall Street sentiment is largely positive, with 52 out of 58 brokerage recommendations for Amazon classified as "Strong Buy" [16] Group 3: Valuation and Investment Potential - Amazon's stock has increased by 2,600% over the past 15 years, but has underperformed the tech sector in the last five years, with only a 2% increase in 2025 compared to a 24% surge in tech [13] - The stock is trading at a 95% discount to its all-time highs and 55% below its 20-year median, with a forward earnings multiple near its lowest levels since the 2008 financial crisis [15] - A strong earnings report could trigger a breakout, as the stock is currently trading 20% below its average Zacks price target and 7% below its highs [14]