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Amazon (NASDAQ:AMZN) has been a long-term winner, but it didn’t give investors much to cheer about in 2025. The e-commerce leader’s shares only inched up by roughly 6% in 2025. Its 5-year return of 47% hasn’t even kept up with the S&P 500. However, after a few years of lagging the broader market, it may be time for Amazon stock to shine. These are some of the catalysts that can turn Amazon into a superstar stock next year.
Amazon Has Multiple Growth Opportunities
Even though Amazon’s stock price didn’t move much this year, its business continues to thrive in multiple industries. Overall revenue increased by 13% year-over-year in Q3, with double-digit growth rates for online stores, third-party seller services, advertising services, subscriptions, and Amazon Web Services. Amazon’s ability to achieve high growth rates in multiple industries while expanding profit margins makes it a standout stock, especially with its lackluster performance this year.
Amazon Web Services revenue growth has been accelerating due to artificial intelligence. AI tools need cloud platforms to work effectively, and Amazon is one of the leading cloud providers. Online ad sales should also continue to increase as Amazon continues to gain market share in the e-commerce industry. Amazon customers buy products on the site and then click a few product ads along the way. The setup increases the average lifetime value of each customer.
Amazon’s attractive growth numbers show up in domestic and international markets. North American sales increased by 11% year-over-year while international sales were up by 14% year-over-year. Amazon achieved this growth while boosting net income by 38% year-over-year.
Artificial Intelligence Offers Multiple Growth Opportunities
Amazon Web Services is the key beneficiary of artificial intelligence, but that’s not the only part of Amazon’s business that can benefit from the new technology. Amazon also uses AI to present personalized products and ads for its customers, optimizing its online marketplace in the process.
The tech giant is also producing custom AI chips under its Trainium2 brand. Amazon is giving nearly 500,000 Trainium2 chips to Claude AI maker Anthropic in exchange for a large stake in the company. Beyond this deal, Trainium2 is already a multi-billion-dollar brand that grew by 150% sequentially. AI chips can become a large part of Amazon’s business in the long run and expand margins.
AI chips and cloud computing give Amazon direct exposure to AI, but the company also has AI agents running in the background for its products. The company’s AI agent, Transform, has seen significant adoption among AWS customers and has saved the company roughly 700,000 hours of manual cloud migration efforts year-to-date. Amazon’s AgentCore is a new product that makes it easy for developers and businesses to build their own AI agents. All of these revenue streams should grow in the years ahead as AI becomes more prevalent in every industry.
The Valuation Has To Give
Amazon’s revenue and net income growth rates exceeded the stock’s 2025 gains. That trend has also played out over the past five years. Amazon is closing out the year with a 33 P/E ratio, which makes it one of the most affordable Magnificent Seven stocks.
While retail is known for low margins, Amazon has been boosting its profit margins for several years due to cloud computing, online ads, and other initiatives. The higher margin parts of the business are growing faster than the low margin components, and that should help Amazon expand its margins even more in 2026.
Amazon’s guidance and CEO Andy Jassy’s commentary suggest that the momentum will continue in 2026. “We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business,” Jassy said in the Q3 press release.
These developments point to a higher P/E ratio which will bring up the stock price. Just as Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) held a low P/E ratio for years before its AI opportunities became more apparent, Amazon finds itself in a similar scenario heading into the New Year.