Should You Invest in Amazon Stock in 2026?

Core Viewpoint - Amazon's stock had a disappointing performance in 2025, closing 5% higher but lagging behind other Magnificent Seven stocks and the S&P 500 [1] Group 1: Stock Performance - Amazon's stock did not lose value in 2025 but underperformed compared to the S&P 500 and other major stocks [1] - The stock's five-year gains also trailed the S&P 500, indicating a longer-term underperformance [1] Group 2: Future Outlook - There is potential for Amazon's stock to rebound in 2026, similar to Google's unexpected rally at the start of 2025 [2] - Catalysts for this resurgence include strong growth in Amazon Web Services and other revenue streams [2] Group 3: Amazon Web Services (AWS) - AWS is a significant contributor to Amazon's revenue, accounting for nearly 20% of total revenue [3] - AWS revenue grew by 20% year-over-year in Q3, marking a meaningful acceleration from previous mid-teen growth rates [4] - The growth in AWS is expected to positively impact overall revenue growth, as it supports many websites and AI applications [4] Group 4: Revenue Growth - Amazon reported a 13% year-over-year sales growth in Q3, which is higher than its stock gains [5] - If revenue and net income growth continue to outpace stock gains, the stock price is expected to catch up [6] Group 5: Diversification and Additional Revenue Streams - Amazon is diversifying its revenue sources, with significant growth in online ads, subscriptions, and AI chips [7] - The advertising segment grew by 24% year-over-year, reaching $17.7 billion, while subscription revenue increased by 11% [8] - Amazon's custom AI chips, Trainium, have seen a remarkable 150% sequential growth, indicating strong demand [7]