Prediction: Amazon Stock Is Still a Buy After Hitting All-Time Highs as AWS Revenue Accelerates

Amazon (NASDAQ: AMZN) shares broke out to new all-time highs following its strong first-quarter earnings report, although the stock was unable to keep its gains. Its shares are up about 40% over the past year, as of this writing. However, I believe Amazon is still in the early stages of its overall rally and predict it has a lot of upside ahead, both this year and in the coming years.

Let's take a closer look at its Q1 2026 results and why I think the stock is still a great buy.

Cloud growth continues to accelerate

The big three cloud computing companies -- Amazon, Microsoft and Alphabet -- all reported their earnings on the same day (after the bell on April 29). The one clear message all three sent is that demand is booming due to artificial intelligence (AI). Just as impressive, though, is that cloud operating margins are also improving with AI workloads.

For Q1, Amazon's Amazon Web Services (AWS) segment saw revenue growth accelerate 28% to $37.6 billion. That was up from 24% growth in Q4 2025 and 20% growth in Q3 2025. It was AWS' fastest revenue growth in nearly four years (15 quarters).

Operating income in the segment, meanwhile, climbed 23% to $14.2 billion. Its operating margin of 37.7% has now risen for three straight quarters, helped by the company using more of its Trainium chips. Amazon said at scale Trainium will save it tens of billions of dollars in capital expenditures (capex) and provide better operating margins for inference.

The company said it has $225 billion in commitments for its Trainium chips, which offer 30% better price performance than comparable graphics processing units (GPUs). It said Trainium2 is largely sold out, while Trainium3, which just began shipping, is close to fully subscribed. It also noted that Trainium4, which is about a year and a half away, is already largely reserved.

Amazon's e-commerce operation, meanwhile, continues to hum along, with solid sales growth and the business showing impressive operating leverage. Its North America sales climbed by 12% year over year to $104.1 billion, while international sales jumped 19%, or 11% in constant currencies, to $39.8 billion. Advertising continues to be a growth driver, with its ad revenue increasing 24% to $17.2 billion, driven by its sponsored ad business.

The company once again saw impressive operating leverage in its North American e-commerce operations, with its operating income for its North American segment surging 43% to $8.3 billion. Its international segment saw operating income soar 40% to $1.4 billion.

Overall, Amazon's revenue rose by 17% year over year to $181.52 billion, which easily topped the $177.3 billion analyst consensus, as compiled by LSEG. Earnings per share (EPS) surged 75% to $2.78, but included a large gain from its investment in Anthropic, so it was not comparable to analyst estimates for EPS of $1.64.

Amazon forecast second-quarter revenue to be between $194 billion and $199 billion (representing growth of between 16% and 19%), which was above the $188.9 billion consensus. It plans to launch its Leo satellite commercial internet service in Q3 2026.

Image source: The Motley Fool.

Time to buy the stock

I think it's hard not to come away from Amazon's quarterly update extremely bullish. The company is seeing AWS growth accelerate, with operating margins improving. Meanwhile, its custom chip business, led by Trainium and its Graviton CPU, is gaining a lot of momentum. On both the hardware and software side, with AgentCore and now Amazon Bedrock Managed Agents Powered by OpenAI, the company looks very well positioned for agentic AI.

I also think that the operational efficiencies that the company is driving in its e-commerce operations through AI and robotics are being greatly overlooked. The progress it has made here is just astounding, and it's not getting nearly the credit it deserves. Meanwhile, Leo could add an additional growth driver to its portfolio of businesses.

Trading at a forward price-to-earnings ratio of about 33 times 2026 analyst estimates and 27 times 2027 estimates, the stock still trades well below the multiple of its retail peers Walmart and Costco (which trade at over 40 times forward multiples).

As such, my prediction is that Amazon's stock will be much higher by the end of the year and over the next five years, given its growth and attractive valuation.

Geoffrey Seiler has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Costco Wholesale, Microsoft, and Walmart. The Motley Fool recommends London Stock Exchange Group Plc. The Motley Fool has a disclosure policy.