Have you ever watched a stock you believe in lag behind the pack, only to feel that nagging sense it’s being unfairly punished? That’s exactly where Amazon finds itself as we close out 2025 – the clear underperformer among the so-called Magnificent Seven tech giants. Yet, according to one of Wall Street’s most watched voices, this dip represents a rare buying opportunity that’s screaming to be taken advantage of.
It’s frustrating, really. While other big names have powered ahead, Amazon shares have drifted lower, weighed down by worries over slowing growth in its crown jewel cloud division. But recent analyst upgrades are shining a light on what could be a significant turnaround, and it’s got some prominent investors excited about what’s coming next.
Why Amazon Deserves a Second Look Right Now
The heart of the bullish case boils down to one critical business segment: cloud computing. For years, this has been the high-margin engine driving Amazon’s profitability, and after a period of deceleration, signs point to a meaningful reacceleration ahead. Analysts who have dug deep into the numbers are now raising their forecasts, suggesting the market might be dramatically underestimating the growth potential.
In my view, these upgrades aren’t just routine adjustments. They’re based on real conversations with people close to the operations – former employees who see substantial new commitments from enterprise customers. When you combine that with broader trends in artificial intelligence adoption, the picture starts looking a lot brighter than the current stock price suggests.
The Cloud Business: From Concern to Catalyst
Let’s be honest – the past couple of years haven’t been easy for cloud investors. Growth rates that once seemed unstoppable moderated as companies optimized their spending post-pandemic. Amazon’s cloud unit felt that pressure acutely, leading to investor skepticism and multiple compression in the stock.
But something changed in recent quarters. The latest earnings report showed revenue growth picking up speed again, surpassing even optimistic expectations. What caught many by surprise wasn’t just the beat, but the quality of the growth – driven by new workloads, longer-term contracts, and increasing demand for advanced computing capabilities.
If you can buy a dominant tech franchise at less than 30 times next year’s earnings, with clear visibility into accelerating growth in its most profitable segment, that’s the definition of value in this market.
That’s the core argument being made by bulls right now. And when you look at the valuation compared to historical norms and peers, it’s hard to argue against the logic.
AI: The Game-Changer Hiding in Plain Sight
Perhaps the most interesting aspect – and one that doesn’t get enough attention – is Amazon’s positioning in artificial intelligence. Through strategic investments and partnerships, the company has secured access to some of the most advanced AI models available today.
Developers increasingly prefer certain AI tools that run natively on Amazon’s infrastructure. This isn’t coincidence; it’s the result of billions invested in building relationships and capabilities that lock in customers for years. Every enterprise rushing to implement generative AI needs somewhere to run their models, and Amazon is making sure it’s their first choice.
- Multi-billion dollar investments in leading AI companies
- Preferred access to cutting-edge large language models
- Growing ecosystem of AI tools built specifically for their platform
- Network effects that make switching costs prohibitive
These aren’t small advantages. They’re the kind of moats that compound over time, turning today’s investments into tomorrow’s dominant market share.
Valuation: When Good Companies Get Cheap
Numbers don’t lie, and right now they’re telling an interesting story. Trading at roughly 28 times forward earnings estimates, Amazon sits at a notable discount to its historical average and many growth peers. For a company with its track record of execution and market dominance across multiple sectors, that feels like the market is pricing in far too much pessimism.
Consider this: the e-commerce business continues to generate massive cash flow, retail operations are improving margins through efficiency gains, and advertising has become a high-growth, high-margin profit center. Layer on top an accelerating cloud business with AI tailwinds, and you have a combination that’s rare in today’s market.
I’ve seen this movie before – high-quality companies temporarily out of favor because one segment hits a speed bump, only to roar back when the growth story reasserts itself. The difference this time? The potential magnitude of the AI opportunity could make the recovery particularly powerful.
What Analysts Are Saying Now
Recent research notes have started reflecting this more optimistic outlook. One major firm just boosted their revenue growth expectations for the cloud division to 24% for the coming year, up from previous estimates. They’re citing increased customer commitments and the growing impact of AI workloads.
Price targets are moving higher as well, with some now approaching $300 or more. While no one has a crystal ball, the convergence of multiple analysts reaching similar conclusions based on fundamental improvements carries weight.
Risks to Consider (Because There Always Are)
To be fair, nothing is guaranteed in investing. Competition in cloud remains fierce, with well-funded rivals pushing hard for market share. Economic uncertainty could impact enterprise spending. Regulatory scrutiny continues across big tech.
Yet these risks have been known for years and are largely priced in at current levels. The asymmetric opportunity – limited downside with substantial upside if the cloud reacceleration thesis plays out – is what makes the current setup compelling to many professional investors.
The Bottom Line for Investors
Sometimes the best opportunities come disguised as problems. Amazon’s 2025 underperformance has created what appears to be a significant disconnect between the stock price and the underlying business momentum.
With cloud growth showing signs of reacceleration, AI investments beginning to bear fruit, and a valuation that already reflects much of the previous pessimism, the risk/reward equation looks increasingly favorable.
For patient investors willing to look past short-term noise, this could be one of those moments that gets talked about years from now – when a true compounder was available at a reasonable price during a period of temporary weakness.
The market has a way of eventually recognizing value. When it does, those who positioned themselves ahead of the crowd tend to benefit the most. Whether 2026 proves to be Amazon’s comeback year remains to be seen, but the ingredients appear to be falling into place.
In investing, as in life, timing matters – but understanding value matters more. Right now, Amazon seems to offer both a compelling story and an attractive entry point for those with a longer time horizon.
Disclosure: This article represents opinion and analysis based on publicly available information. It is not investment advice, and readers should conduct their own research and consult professional advisors before making investment decisions.
