Keep your eye on this stock in 2026

Core Viewpoint - Amazon is gaining renewed interest from Wall Street as it enters 2026, with shares up over 6.7% in early trading, outperforming its entire gain from 2025, which was only 5% compared to the S&P 500's 16% advance [1][2] Financial Performance - In the most recent quarter, Amazon reported earnings per share (EPS) of 1.95, exceeding estimates of 1.57, marking a year-over-year increase of over 36% [3] - Earlier in the year, EPS rose more than 60% year-over-year in Q1 and over 33% in Q2, indicating strong earnings momentum [3] - Q4 estimates are conservative, suggesting potential for an upside surprise in the next earnings release [4] Business Segments - Amazon Web Services (AWS) is a core long-term growth driver, with sales growth increasing from 17% in the first half of 2025 to approximately 20% in Q3, with expectations for continued improvement in 2026 [5] - AWS's recent customer wins, including a partnership with Aumovio for autonomous driving, highlight its role in corporate technology spending, particularly for AI workloads [6] - The advertising segment is also growing, with Q3 advertising revenue rising 24% year-over-year to $17.7 billion, benefiting from improved personalization and user engagement [8] Investor Sentiment - Wall Street sentiment towards Amazon remains positive, with 36 out of 37 analysts rating it a Buy, and an average 12-month price target of $297.29, implying a 23.43% upside from the recent share price of $240.85 [12][13] - Recent analyst updates have reiterated Buy ratings, with some adjustments in price targets reflecting valuation discipline rather than changes in fundamentals [14] Future Outlook - Analysts expect AWS growth to reach the mid-twenties in 2026, with operating margins remaining in the mid-thirties, making Amazon's current valuation attractive at roughly 12 times 2026 enterprise value to EBITDA [16] - Despite concerns about trailing peers in AI development, AWS's leadership in cloud infrastructure positions Amazon as a key player in enterprise AI [17] - Overall, Amazon's recent earnings execution, improving cloud trends, and growing advertising business support a constructive outlook heading into 2026 [18]