Why Amazon stock could have nearly 50% upside in 2026

Core Viewpoint - Amazon's stock performance in 2025 has been underwhelming, with only a 6% increase year-to-date, significantly trailing the S&P 500's 18% gain, attributed to slowing sales growth in AWS and mixed sentiment on AI monetization [1] Group 1: Stock Performance and Market Sentiment - Amazon announced its largest-ever layoffs, cutting 14,000 corporate roles, which did not help improve market sentiment [2] - The company is expected to be the worst performer among the "Magnificent Seven" stocks, while Alphabet has seen a 66% increase this year due to optimism surrounding its new AI model [2] - Despite the mixed sentiment, Wall Street analysts have maintained a positive outlook, with some including Amazon in their "top picks" for 2026, citing potential upside [3] Group 2: Analyst Projections and Growth Catalysts - Evercore ISI analyst Mark Mahaney estimates Amazon has about 50% upside potential, driven by catalysts such as reaccelerating AWS growth, demand for AI chips, and strong advertising revenue growth [3][4] - Amazon is characterized as a high-quality compounder with a 25% EPS compound annual growth rate and solid double-digit revenue growth [4] - Yahoo Finance data indicates that 96% of sell-side analysts rate Amazon as a Strong Buy or Buy, with an average price target suggesting a 27% upside from current levels [5] Group 3: Market Skepticism and Diversification - Main Street sentiment appears more skeptical, with 96% of users predicting little change in the stock by January 2026 [6] - JPMorgan analyst Doug Anmuth shares a bullish view, projecting a 30% upside potential, and highlights a new $38 billion cloud services deal with OpenAI as a potential growth driver [6][7] - Anmuth emphasizes Amazon's diversification across revenues and profits, noting various large growth opportunities despite mixed sentiment [7]