Amazon has been stuck in last place for years. It’s trailed every one of the other six Big Tech giants. But now, the bulls think it might finally have something real behind it. And that something is AWS.
The cloud business that used to lead the pack is picking up speed again, thanks to AI. A bunch of money is now flowing into data centers, chips, and computing deals, and Amazon Web Services is right in the middle of it.
The company posted its fastest AWS growth in years in October. Then it signed a $38 billion deal with OpenAI to supply cloud power. A few weeks later, reports came out that OpenAI wants to raise at least $10 billion from Amazon and switch to Amazon’s Trainium chips.
These are the same chips Amazon built in-house to compete with Nvidia. That kind of interest from OpenAI isn’t random. It’s exactly the kind of thing Wall Street has been waiting for.
Amazon trails in tech stock gains but bulls say it’s still cheap
Amazon had the worst return in the Magnificent Seven last year. It only gained 5% in 2025, while the Nasdaq 100 shot up 20%.
That made it seven straight years where Amazon underperformed the group. It started 2026 with a small jump, even after a 3.4% drop on Tuesday, and it’s still ahead of everyone except Alphabet.
Because of that weak run, the stock is now trading way cheaper than its rivals. Amazon is priced at 24 times projected earnings over the next year. That’s less than Apple, Microsoft, or Alphabet. It’s also way below Amazon’s five-year average of 36. This is why the bulls are leaning in.
They’re pointing at what happened to Alphabet. The company was seen as losing the AI race for years. It underperformed both Amazon and the rest of the Magnificent Seven in 2023 and 2024.
Then in March 2025, Alphabet dropped the latest version of its Gemini AI model, and the stock took off. It’s up 89% since then, the best in the group and one of the best in the S&P 500.
“It looks like Google did 18 months ago,” said Nancy Tengler, who runs Laffer Tengler Investments. “Things can change very quickly in this sector of the business.”
Cloud growth and OpenAI deals push up analyst forecasts
For most of 2025, investors thought AWS was falling behind. But Brian White, an analyst at Monness Crespi Hardt, said Amazon turned that around with its latest earnings and the OpenAI news.
“Amazon flipped this narrative on its head,” he wrote in a note on December 22. White recommends buying the stock. So do 95% of analysts surveyed by Bloomberg earlier this month.
The financials are starting to reflect all that. Analysts now expect earnings per share to grow 12% in 2026, and then jump another 22% in 2027. Revenue is forecast to rise 11% each year. Operating income is expected to go up 26% this year and 24% in 2027.
Over the past six months, estimates for 2026 net income have climbed 8.2%, and revenue expectations rose 4.2%.
Clayton Allison, who manages money at Prime Capital Financial, owns Amazon stock. He said, “It’s the AI name that hasn’t gotten the love. It has built out the AI infrastructure everyone wants to use, it’s the e-commerce giant, and it is trading at a discount.”
All this is happening while global markets are a mess. The U.S. is threatening economic war over Greenland. Japan’s political chaos is shaking up bonds. Trump’s White House is still going after the Federal Reserve, raising questions about its independence.
That kind of backdrop would usually kill risk appetite. But stocks dropped Tuesday, and strategists still aren’t panicking. They say markets usually recover fast from geopolitics, unless oil prices spike. Brent and WTI both rose Tuesday, but they’re still way under long-run averages.
Alastair Pinder at HSBC said on January 20 that markets bounce back two-thirds of the time after these types of events. “The main exception comes when geopolitics drives oil prices sharply higher.” Right now, that’s not happening.
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Source: https://www.cryptopolitan.com/amazon-bulls-see-reboot-in-stock-sentiment/
