Got $5,000? The Smartest AI Growth Stock to Buy During the Great Rotation

Since the start of 2026, leading tech stocks have sold off as investors piled into defensive sectors like consumer staples, a phenomenon being called the Great Rotation. Yet companies' investment in artificial intelligence (AI) keeps rising, making now an excellent time to buy tech stocks.

The Motley Fool's research shows top AI companies plan to boost capital spending by roughly 50% this year. If these companies continue to invest in infrastructure, it means they see more opportunities to grow their businesses.

If you have extra cash to invest for the next five years and beyond, Amazon (NASDAQ: AMZN) may be the smartest AI stock to buy and hold. It is unique in that it can monetize AI in its cloud business while also using these advanced capabilities to boost sales and lower costs in its online retail store, which serves millions of shoppers.

Together, those two growth engines make Amazon an AI winner, and it's now trading at its lowest valuation in years.

Image source: Getty Images.

Why Amazon is an AI leader

Most companies can't afford to build their own AI data centers, which is why Amazon and other leading cloud providers build them on their behalf. Businesses rent storage and processing power from Amazon Web Services (AWS), and the company is turning this into a lucrative profit driver. Last quarter, AWS generated $35 billion in revenue, up 24% from the year-ago quarter.

The company had $131 billion on capital expenditures in 2025, up 58% over 2024. This is partly fueling its data center capacity to support growing demand for AI services in AWS. Management's ability to spend at this pace from its operating cash flows puts it in a strong position to continue building the most advanced AI capabilities to drive long-term growth.

AWS offers advanced chips from other suppliers but also invests in its own custom chips (the Graviton and Trainium), which helps fuel recurring demand for AI computing capacity. More than 100,000 companies are using the Trainium2 chip to power AI workloads on Amazon Bedrock, a tool that helps enterprises build and deploy agents and AI-powered applications.

Last year, AWS accounted for 18% of Amazon's business but 57% of the company's total operating profit. These same AI capabilities in AWS are also unlocking tremendous value in its largest business, e-commerce

AI is driving lower costs and higher cash flows

Amazon is building a second AI growth engine inside e-commerce. The company reported that Rufus, its agentic AI shopping assistant, helped drive nearly $12 billion in incremental annualized sales during 2025.

That's still a small slice of its online sales, but it highlights the opportunity to monetize AI tools used by millions of shoppers every day. Management is using AI to reduce costs across the operation, forecast demand, optimize inventory placement, and route packages at the lowest cost. It has also deployed over 1 million robots to assist employees in picking and packing items across its fulfillment centers.

Amazon's use of AI and robotics could significantly increase its margins over time. Since 2022, its trailing-12-month cash from operations (CFO) has climbed 198% to $139 billion.

Why now is the time to buy Amazon

No stock, including Amazon, is risk-free. Cloud competition is intensifying, with Microsoft and Alphabet's Google growing revenue faster than AWS. Amazon may eventually lose its top market share spot, but this is not a deal-breaker for investors. The company continues to see customers use AI computing capacity in AWS as quickly as it can install it. The demand for AI is so great that all three top cloud providers are thriving.

Its retail business has durable advantages, such as expanding selection, fast delivery, and the Prime benefits bundle. This keeps customers within its system, and engagement with its AI assistant Rufus shows how Amazon may continue to drive innovation in retail, as it has for the past 30 years.

For investors, the setup looks attractive. The stock is trading at a price-to-CFO multiple of 16. This is near its lowest cash flow multiple in more than 10 years.

Obviously, no one can know for certain where the market (and Amazon stock) will end up in 2026, but the share's valuation already seems very compelling. For investors seeking AI exposure with proven revenue, margin upside, and a reasonable valuation, Amazon fits the bill.

John Ballard has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy.