Amazon (AMZN) Stock: Barclays Says AWS and AI Will Drive Outperformance

TLDR

• Barclays says Amazon will outperform other mega-cap tech stocks, driven by AWS growth.
• AWS hit a $15 billion annualized revenue run rate for AI services.
• Amazon’s custom chip business has a $20 billion run rate, doubling in three months.
• AMZN trades at a forward P/E of 32, historically low and at a discount to Walmart and Costco.
• AWS grew revenue 24% year over year last quarter, its fastest pace in over three years.

Amazon is getting fresh attention from Wall Street. Barclays analysts say AMZN is likely to outperform the rest of the Magnificent 7 in the months ahead, pointing to accelerating growth at AWS and a quietly powerful chip business.

Amazon.com, Inc., AMZN

The British bank wrote in a client note that latest metrics give them “confidence around AWS upside from AI over coming years.” Barclays called Amazon “one of the more highly debated stocks” in its coverage but said a clear bull thesis is building.

That thesis got a concrete data point recently. Amazon disclosed that AWS has reached a $15 billion annualized revenue run rate for AI services alone. The company also plans to add more than one million Nvidia processors between now and 2027.

Barclays estimates that once fully deployed, those processors could translate into $100 billion in annual AWS revenue. That’s a big number, and it’s part of why analysts are growing more confident on the stock.

The Chip Story Nobody Is Talking About

Amazon’s custom chip business is growing fast — and quietly. It now carries a $20 billion external revenue run rate and has doubled in just three months. When internal use is factored in, Amazon says it’s closer to a $50 billion business.

Beyond its Trainium AI chips, Amazon is also developing its own CPUs. With agentic AI on the rise, CPUs are becoming a new bottleneck, and Amazon is positioning itself ahead of that curve.

AWS revenue grew 24% year over year last quarter — its fastest pace in more than three years. Amazon built a large facility for AI partner Anthropic that came online in Q4, adding more fuel to cloud demand.

Valuation Numbers That Stand Out

AMZN’s forward P/E currently sits at 32. That’s well above last year’s low of 24 but still historically cheap for the company. Amazon’s trailing P/E has been trending lower for much of the past decade.

What’s more striking is how Amazon now trades at a discount to Walmart and Costco in the retail space — despite growing retail revenue and profits faster than both.

North American operating margin hit 9% in Q4, up from 8% a year ago. That improvement drove a 24% jump in North American operating income on just a 10% increase in sales.

Robotics and AI are making Amazon’s e-commerce operations more efficient. Strong growth in its high-margin sponsored ads business is also helping push margins higher.

Amazon’s grocery segment crossed $150 billion in U.S. gross sales in 2025, making it the country’s second-largest grocer behind Walmart.

AMZN stock carries a consensus Strong Buy rating from 46 Wall Street analysts — 43 Buys and three Holds. The average price target of $284.09 implies roughly 15% upside from current levels.

AMZN is currently trading at $254.29, up 1.84% on the day, near its 52-week high of $258.60.

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