Here’s what would it take for an Amazon stock comeback in 2026
After a year defined by concerns about cloud growth and tariff impact on retail, Amazon shares are heading into 2026 with gains. The Club name has struggled through 2025 as Wall Street worries that Microsoft’s Azure and Google Cloud are outpacing the growth of No. 1 cloud Amazon Web Services and how President Donald Trump’s tariffs could pressure already thin retail margins. Amazon shares have gained only 6% since the beginning of the year, lagging the S&P 500’s gain of nearly 18% in the same period. The stock was also underperforming its mega-cap tech peers. Amazon Year-to-date performance at a glance: Up 6% Forward price-to-earnings multiple: 28.9 vs. five-year average of 44.3 Our rating: Buy equivalent 1 rating Our price target: $275 per share AMZN YTD mountain AMZN stock performance YTD. But Amazon may have hit a rough patch in the third quarter as AWS posted 20% revenue growth, the fastest since 2022. This is one of the key reasons why the Investment Club sees Amazon as one of five stocks that will take off in 2026. Analysts also continue to trust Amazon. TD Cowen named Amazon the top megacap internet pick for 2026 earlier this month, noting three drivers of growth: AWS’ continued growth momentum, strengthening e-commerce and advertising momentum, and continued expansion of margin from advertising. In fact, analysts said advertising was an “underappreciated” bright spot. TD Cowen expects Amazon’s advertising business, which is already one of the company’s highest-margin segments, to get an even bigger boost from Prime Video. With its expanding slate of live sports rights, including Thursday Night Football and an NFL playoff game airing in January, analysts argue Prime Video could become “a significant driver of Amazon’s advertising business in the coming years” as more viewing moves to streaming and performance-based advertising. On the retail side, Amazon continues to increase the value of its Prime membership through faster delivery. Same-day delivery for perishable goods now reaches more than 2,300 cities and towns, with further expansion planned for 2026. The company has moved Amazon ever closer to Walmart by offering free same-day grocery delivery on orders over $25. Yet the biggest driver of Amazon’s comeback is its cloud computing business, which is also the company’s profit engine. The key question for investors for 2026 is whether Amazon can bring its AI infrastructure online quickly enough to meet demand. Amazon said it plans to double its data center capacity by 2027, after years of supply constraints limiting cloud growth. However, this increase depends on the resolution of power availability. If Amazon can demonstrate consistent capacity conditions, maintain AWS’s growth momentum, and continue to increase advertising and retail efficiency, we believe 2026 could mark a meaningful stock recovery. (Jim Cramer’s Charitable Trust is long AMZN, MSFT. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT GUARANTEE IS MADE.
