1 Reason Amazon Stock Could Outperform in 2026
Key Points
Amazon shares underperformed the S&P 500 in 2025, but there's reason for optimism in 2026.
The prospect of accelerating growth in Amazon's cloud computing business is a catalyst to watch in the new year.
Amazon is positioned to benefit from the agentic AI boom.
- 10 stocks we like better than Amazon ›
Shares of Amazon (NASDAQ: AMZN) underperformed in 2025, posting a total return of 5.2% compared to a 17.9% return for the S&P 500 index. However, one reason this underperformance is unlikely to persist in 2026 is the growth in Amazon's cloud computing business.
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Why buy Amazon stock
Growth for Amazon Web Services (AWS) grew 17% year over year in the first half of 2025. However, growth accelerated to 20% year over year in the third quarter.
AWS remains the cloud leader, but its revenue growth has been capped by a lack of sufficient compute capacity to meet demand. This limited the segment's growth in 2025; however, Amazon plans to double its capacity by the end of 2027, which could lead to higher top-line growth.
Amazon could be well-positioned to meet the growing demand for agentic AI with Amazon Bedrock, which management expects to become a larger revenue driver for its cloud business over the long term.
Because AWS is Amazon's most significant profit driver, growth from this segment is a major catalyst for the stock. This is while the stock is trading at its lowest multiple of operating cash flow in over 10 years, setting the stage for outperformance over the S&P 500 in 2026.
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John Ballard has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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