Despite a lackluster performance in 2025, Amazon’s stock (AMZN) may have significant upside potential in 2026, with some analysts projecting a nearly 50% increase in value. Shares of the e-commerce and cloud giant have struggled to keep pace with the broader market, notably trailing the S&P 500’s 18% gains. Factors such as slowing growth in Amazon Web Services (AWS), mixed sentiment around its artificial intelligence (AI) initiatives, and a massive round of layoffs in October have weighed on the stock. However, several catalysts are emerging that could drive a strong rebound in the near future. Wall Street remains optimistic about the company’s prospects, with key analysts highlighting Amazon’s diverse revenue streams and growth opportunities.
The Struggles of 2025: A Year of Underperformance
Amazon’s stock has had a rough year in 2025, with shares up only 6%, significantly underperforming the S&P 500, which rose 18%. A key factor contributing to this underperformance has been the slowing sales growth within Amazon’s core AWS business, which had been a major driver of its past success. Additionally, while Amazon has been betting heavily on monetizing artificial intelligence (AI) technologies, there has been mixed sentiment in the market regarding the potential of these initiatives to significantly impact the company’s bottom line.
Compounding these challenges, Amazon made headlines in October 2025 when it announced the largest layoff in its history, cutting 14,000 corporate roles. This move sparked concerns about the company’s internal struggles and its ability to adapt to a rapidly changing tech landscape. As a result, Amazon is likely to close out the year as one of the worst-performing members of the “Magnificent Seven” tech giants, a group that includes companies like Alphabet (GOOG), which has seen impressive growth due to optimism surrounding its AI developments.
The 50% Upside Potential: Analyst Optimism for 2026
Despite the setbacks in 2025, analysts remain bullish on Amazon’s prospects for 2026, with some projecting significant upside. Evercore ISI tech analyst Mark Mahaney, in particular, has placed a 50% upside potential on Amazon’s stock, citing several key factors that could drive the company’s recovery.
Mahaney highlighted the following catalysts:
- Reaccelerating Growth at AWS: Although AWS has faced slowing growth in recent quarters, Mahaney believes that the cloud business will experience a revival as demand for cloud computing services continues to rise. Amazon’s dominance in the cloud market remains strong, and as businesses expand their use of cloud technologies, AWS is expected to see renewed growth.
- AI Growth and Trainium Chips: Amazon’s new Trainium AI chips are expected to see increased demand as the company continues to push its AI initiatives forward. This could open up a new revenue stream for Amazon, especially as industries increasingly adopt AI-driven solutions.
- Advertising Revenue: Amazon’s advertising business has shown impressive growth in recent years, and this trend is expected to continue as the company leverages its vast ecosystem of data to target consumers with highly effective ads.
- Alexa+ Expansion: Amazon’s virtual assistant, Alexa, has been a central part of its smart home strategy, and the upcoming ramp-up of Alexa+ could provide a significant boost to the company’s product offerings in the connected home space.
Mahaney noted that Amazon remains a high-quality compounder, with a projected 25% compound annual growth rate (CAGR) in earnings per share (EPS), solid double-digit revenue growth, expanding operating margins, and a promising free cash flow outlook.
Wall Street Consensus: A Strong Buy Rating
Amazon’s outlook on Wall Street remains overwhelmingly positive. According to Yahoo Finance data, 96% of the 67 sell-side analysts covering Amazon have rated the stock as a Strong Buy or Buy. This near-unanimous support comes despite the company’s underperformance in 2025, suggesting that investors remain confident in its long-term growth prospects. The average price target for Amazon on Wall Street is $295, which represents a 27% upside from current levels.
However, sentiment on Main Street, as captured by prediction market data from Polymarket, is more skeptical. A large majority of retail investors believe that Amazon’s stock will remain relatively flat by the end of January 2026. This discrepancy between Wall Street and retail investor sentiment highlights the uncertainty surrounding Amazon’s short-term performance, with much of the optimism focused on the company’s future growth prospects rather than immediate results.
JPMorgan’s Doug Anmuth: 30% Upside for Amazon
JPMorgan analyst Doug Anmuth has a more conservative but still optimistic outlook for Amazon, projecting a 30% upside potential for the stock. Anmuth shares Mahaney’s belief that Amazon’s growth prospects are tied to the continued expansion of AWS and the increasing demand for AI technologies. Additionally, Anmuth pointed to Amazon’s new $38 billion, seven-year cloud services deal with OpenAI as a potential catalyst for revenue growth in the cloud sector.
Ongoing diversification of Amazon’s business model—spanning e-commerce, cloud computing, advertising, and AI—makes the company uniquely positioned to weather the challenges of 2025. Anmuth described Amazon as “the most diversified mega-cap across revenues and profit,” noting that the company has numerous large growth opportunities ahead.
Challenges Ahead: Balancing Innovation with Profitability
While analysts remain optimistic, Amazon still faces several challenges that could impact its future performance. One of the key concerns is how well the company can balance its continued investment in innovation—particularly in AI and cloud computing—with the need to maintain profitability. Amazon’s aggressive expansion into new markets has often resulted in large upfront costs, and the company will need to ensure that its investments generate returns in a timely manner.
Another challenge is the competition. Amazon faces stiff competition in both the e-commerce and cloud sectors from rivals like Microsoft, Google, and Alibaba. As these competitors ramp up their own AI initiatives and cloud offerings, Amazon will need to differentiate itself and maintain its market share. Additionally, concerns around global economic conditions, inflation, and changing consumer behavior could impact Amazon’s bottom line.
A Promising Outlook for Amazon in 2026
Despite a difficult 2025, Amazon remains a company with strong long-term growth potential. Analysts like Mark Mahaney and Doug Anmuth see significant upside for the stock, with both highlighting the company’s diversified revenue streams, strong growth in AWS and advertising, and the potential for AI-driven innovation. While the company faces challenges, including intense competition and the need to balance investment with profitability, the long-term outlook remains positive.
As Amazon continues to expand its AI capabilities and capitalize on the growth of cloud computing and digital advertising, investors will be watching closely to see if the company can execute on its promises. With the stock still trading below its potential, 2026 could prove to be a pivotal year for Amazon as it looks to regain momentum and deliver on its growth prospects.
