Analysts crown Amazon as the top trillion-dollar stock to buy now, with the median Wall Street price target of about $262 a share implying roughly 24% upside from recent levels.
Amazon’s stock slipped about 10% after it released its second-quarter results, as investors digested management’s guidance for the third quarter. The company still delivered a strong quarter, topping estimates on both revenue and earnings, with revenue up 13% to $168 billion and earnings per share rising meaningfully. Operating margin expanded, helping GAAP earnings rise 34% to $1.68 per diluted share. Yet the guidance for the next quarter was seen as tempered, prompting the share retreat.
A central theme for Amazon remains its exposure to artificial intelligence across its core businesses. The case for AI is anchored in three pillars: retail, advertising, and cloud computing. Amazon’s retail operation remains the largest online marketplace by revenue and a top destination for web traffic, while its ad business continues to scale in the retail ad space. AWS, the leading public cloud, continues to be the backbone for AI workloads, with the company developing hardware and software tools to support AI development and deployment.
Morgan Stanley’s Brian Nowak has highlighted Amazon as an underappreciated AI leader, noting concrete AI applications across its operations. In retail, more than 1,000 generative-AI applications are in use to optimize inventory, forecasting, and last-mile delivery. An AI model is being used to help robots navigate warehouses faster, and plans exist to enable workers to converse with robots. In the cloud, AWS has designed custom chips for AI training and inference, plus a Bedrock platform for generative AI development, alongside tools to help clients build and scale AI agents. AWS is also the primary cloud provider for Anthropic, a relationship that could boost cloud revenue as the startup grows.
Beyond its traditional businesses, Amazon is pursuing new avenues such as autonomous ride-hailing through its Zoox unit. Zoox is expected to launch its first commercial robotaxi service in Las Vegas later this year, with expansion planned to additional cities. Morgan Stanley projects Zoox could support robotaxi services in seven U.S. cities by 2028, illustrating how Amazon’s AI push could extend into transportation.
Despite the soft guidance for the near term, Wall Street has consistently underestimated Amazon’s earnings. Analysts have typically expected slower growth than the company delivers, with recent quarters beating consensus estimates by double-digit margins. If the company maintains its AI-driven momentum across retail and cloud, investors see potential for continued outperformance.
Relative to other trillion-dollar names, Amazon’s current setup stands out in a few ways. The eight U.S.-listed companies valued above $1 trillion include Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta Platforms, Broadcom, and Taiwan Semiconductor. Median target prices and implied upside as of early August show Amazon offering the strongest near-term upside among the group, with Nvidia showing a modest upside and Broadcom a near-flat outlook, while Microsoft, Apple, Alphabet, Meta, and TSMC show double-digit upside in some cases.
For investors weighing options, it’s worth noting that broader market commentary has included caution about valuation. Amazon’s estimated earnings growth through 2026 remains attractive to many analysts, but the stock trades at elevated multiples. Analysts have historically shown a tendency to revise targets higher after quarterly results, which has supported sentiment around Amazon even when near-term guidance is cautious.
Helpful context for potential buyers also comes from investment commentary that identifies a mix of long-term AI opportunity and near-term volatility. The Motley Fool’s Stock Advisor service highlighted a broader list of top stocks to consider, underscoring that Amazon wasn’t among their current top picks and presenting a reminder that diversified exposure to AI and tech leaders remains appealing to many investors.
What to watch next
– Cloud and AI execution: AWS performance, Bedrock-related adoption, and chip development will be key indicators of Amazon’s AI earnings tailwinds.
– Retail and advertising momentum: While retail remains a powerhouse, ad revenue growth and efficiency gains will influence margins and profitability.
– Competitive and macro pressures: Tariff environments, global demand, and competition in cloud and AI services could influence near-term results.
– Robo-taxi prospects: Any progress or pilots in Zoox’s autonomous ride-hailing could provide a new growth narrative if deployed at scale.
Summary
Amazon remains positioned to leverage AI across its dominant retail platform, its expansive advertising network, and the AWS cloud. While near-term guidance provoked a modest stock pullback, the long-term thesis—driven by AI-enabled efficiency, new technologies, and autonomous delivery initiatives—continues to attract investor interest. For those seeking growth exposure tied to AI and cloud leadership, Amazon offers a compelling if higher-risk, higher-reward proposition.
Positive spin
The ongoing AI push across retail and cloud, plus bold experiments in autonomous delivery, suggest Amazon could sustain above-market growth for years, even if quarterly guidance fluctuates. If execution matches the scale of opportunity, the stock could continue to outperform in the multi-year horizon.
Potential risks
– Tariff and macro headwinds impacting margins.
– Cloud growth tempo and competition in AI services.
– Regulatory scrutiny and execution risks in autonomous delivery.
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