Featured News Headlines
- 1 Amazon Stock Dips Into the Red for 2025 Despite AI and AWS Growth Prospects
- 2 From Peak Momentum to Renewed Weakness
- 3 AWS Reacceleration Could Rewrite Amazon’s 2026 Narrative
- 4 Backlog Models Suggest Even Higher Growth Potential
- 5 Why Amazon’s Valuation Still Catches Analysts’ Attention
- 6 AI Workloads Remain the Wild Card
Amazon Stock Dips Into the Red for 2025 Despite AI and AWS Growth Prospects
Amazon Stock Falls 1% YTD – After briefly regaining momentum, Amazon.com has slipped back into its role as one of the Magnificent Seven laggards, with shares once again entering negative territory for 2025. Despite a strong earnings report in late October, the tech giant has struggled to maintain upward price movement amid broader selling pressure across artificial intelligence–linked stocks.
As of Thursday’s close, Amazon (AMZN) shares were down 1% year-to-date, marking the first time in a month that the stock dipped below its 2025 starting point. The downturn highlights how recent macro headwinds and AI-related uncertainty continue to weigh on even the biggest names in Big Tech.
From Peak Momentum to Renewed Weakness
Amazon’s stock has traveled a volatile path over the past several months. At its early-November peak, AMZN was up 16% on the year, riding optimism from its better-than-expected third-quarter performance. But as enthusiasm faded and investors rotated out of AI winners, the stock quickly gave back gains.
Still, the long-term AI race is far from decided — and Morgan Stanley analyst Brian Nowak believes Amazon is positioned for a strong rebound. In a Wednesday note, Nowak reiterated an overweight rating along with a $315 price target, suggesting 45% upside from current levels.
His thesis hinges on one critical growth engine: Amazon Web Services (AWS).
AWS Reacceleration Could Rewrite Amazon’s 2026 Narrative
Amazon’s cloud division has long been its profit powerhouse, but a sluggish second quarter raised questions about AWS’s momentum in the face of intensifying AI demand and rival cloud offerings. Those concerns shifted dramatically in October when Amazon posted a 20% year-over-year increase in AWS revenue during Q3 — a sharp reacceleration that reignited investor interest.
Nowak expects that trend to continue. His base-case projection calls for 23% AWS growth in 2026, but he sees a clear path to 25% or more, driven largely by the surge in AI-related cloud workloads.
A key catalyst is Amazon’s recently announced seven-year, $38 billion deal with OpenAI, which previously pushed AMZN shares to yearly highs. The partnership is expected to meaningfully expand AWS’s backlog, particularly in the fourth quarter of 2025.
Notably, the deal also signals a strategic shift for Amazon: a move to sell compute capacity beyond its existing AI partnership with Anthropic, broadening AWS’s AI footprint across the industry.
Backlog Models Suggest Even Higher Growth Potential
Morgan Stanley’s detailed backlog analysis outlines several scenarios for AWS’s future growth trajectory:
- $60 billion in net new backlog → 25% AWS growth
- $75 billion in net new backlog → 27% AWS growth
- For every $15 billion added to the 2026 backlog, AWS growth increases by 1 percentage point
However, Nowak’s optimism is far from consensus. Wall Street expectations currently peg AWS’s 2026 growth at flat 20%, reflecting broader caution around the economics of AI-related workloads.
Alex Haissl of Rothschild & Co Redburn recently downgraded Amazon to neutral, arguing that AI infrastructure may yield lower margins than traditional cloud services — a concern shared by several analysts watching cloud profitability closely.
Why Amazon’s Valuation Still Catches Analysts’ Attention
Even with mixed sentiment around cloud margins, Amazon’s valuation stands out. AMZN is trading at a significant discount to major Big Tech peers — a factor that some view as a compelling setup for long-term recovery.
Currently, the stock trades at a price-to-earnings-growth (PEG) ratio of 1.4, roughly a 50% discount to the 1.9 PEG median of Amazon’s combined Big Tech and retail peer group. For bullish investors, this pricing gap signals a potentially overlooked opportunity as Amazon continues expanding its AI infrastructure business.
AI Workloads Remain the Wild Card
Whether Amazon can turn its current slump into a lasting recovery depends heavily on how rapidly — and profitably — AWS scales its AI cloud contracts. With demand for high-performance compute exploding across industries, AWS is banking on AI as the next chapter in cloud dominance.
If Amazon successfully capitalizes on AI backlog acceleration, Nowak’s projections could prove conservative. But if AI infrastructure remains margin-compressed, as some analysts fear, AWS’s growth may continue to hover around the lower end of forecasts.
Amazon’s stock may be back in the red for 2025, but analysts remain divided on what comes next. For Morgan Stanley, Amazon’s expanding AI partnerships — particularly the $38 billion OpenAI deal — and its accelerating cloud backlog could mark the beginning of a powerful comeback story in 2026. For others, the path forward remains clouded by margin risks and a shifting competitive landscape.
Either way, Amazon’s role in the AI infrastructure race is only just beginning — and the next year may determine whether the tech giant can reclaim its place among the market’s biggest winners.
