1 Reason Amazon Stock Could Outperform in 2026

Core Viewpoint - Amazon's stock underperformed in 2025 with a total return of 5.2%, significantly lower than the S&P 500's 17.9% return. However, growth in Amazon's cloud computing business is expected to drive better performance in 2026 [1][7]. Group 1: Cloud Computing Growth - Amazon Web Services (AWS) experienced a year-over-year growth of 17% in the first half of 2025, which accelerated to 20% in the third quarter [3]. - AWS's revenue growth has been limited by insufficient compute capacity to meet demand, but Amazon plans to double its capacity by the end of 2027, potentially leading to higher revenue growth [3][4]. - The management anticipates that Amazon Bedrock will become a significant revenue driver for AWS, positioning the company to capitalize on the growing demand for agentic AI [4]. Group 2: Stock Valuation and Market Position - Amazon's stock is currently trading at its lowest operating cash flow multiple in over a decade, suggesting potential for outperformance relative to the S&P 500 in 2026 [4]. - Despite the optimism surrounding Amazon's growth prospects, it was noted that the Motley Fool Stock Advisor identified 10 stocks they believe are better investment opportunities than Amazon at this time [5][7].