Amazon Stock: Poised for a Comeback in 2026 Fueled by Cloud, Ads, and AI
After a challenging 2025 marked by concerns over cloud growth deceleration and the impact of retail tariffs, Amazon (AMZN) enters the new year with significant potential for a stock rebound. Wall Street’s apprehension throughout 2025 stemmed from the perceived acceleration of rivals like Microsoft Azure and Google Cloud, potentially eclipsing Amazon Web Services (AWS) as the leading cloud provider. Additionally, lingering worries about President Trump’s tariffs impacting already slim retail margins cast a shadow over the company’s performance. Consequently, Amazon shares have seen a modest 6% gain year-to-date, significantly trailing the S&P 500’s nearly 18% advance and underperforming many of its mega-cap tech peers.
However, a notable shift may have occurred in the third quarter of 2025. AWS demonstrated a reacceleration in revenue growth, reaching 20% – its strongest performance since 2022. This resurgence is a primary catalyst for the Investing Club’s bullish outlook on Amazon for 2026, identifying it as one of five stocks poised for a significant recovery.
Analysts at TD Cowen have echoed this optimism, naming Amazon their top mega-cap internet pick for 2026. They pinpoint three key growth drivers: sustained reacceleration of AWS, a strengthening e-commerce and advertising momentum, and ongoing margin expansion driven by the advertising segment. TD Cowen specifically highlights advertising as an “underappreciated” growth engine, anticipating that Amazon’s ad business, already a high-margin segment, will receive a substantial boost from Prime Video. With an expanding portfolio of live sports rights, including Thursday Night Football and a crucial NFL playoff game, Prime Video is positioned to become a “key driver of Amazon’s ad business in the coming years.” This is particularly relevant as viewer habits increasingly migrate to streaming platforms, creating fertile ground for performance-based advertising.
On the retail front, Amazon continues to enhance the value proposition of its Prime membership by expanding expedited delivery options. Same-day delivery for perishable goods is now available in over 2,300 cities and towns, with further expansion planned for 2026. The introduction of free same-day grocery delivery for orders exceeding $25 inches Amazon closer to parity with retail giant Walmart, signaling a strategic push to capture a larger share of the grocery market.
Despite these positive developments in retail and advertising, the ultimate determinant of Amazon’s comeback lies in its cloud computing division, the company’s primary profit engine. A central question for investors in 2026 will be Amazon’s ability to rapidly deploy AI infrastructure to meet escalating demand. Following a period of supply constraints that previously capped cloud growth, Amazon has announced ambitious plans to double its data center capacity by 2027. The success of this expansion, however, hinges on securing sufficient power availability.
If Amazon can demonstrate consistent power and capacity conditions, maintain AWS’s renewed growth trajectory, and continue to drive efficiency in its advertising and retail operations, 2026 could indeed mark a significant recovery for the stock. The company’s strategic investments in AI infrastructure, coupled with its established strengths in cloud services, e-commerce, and advertising, present a compelling case for renewed investor confidence.
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