Amazon Stock Has Another Growth Story Investors May Be Missing Vandita Jadeja Thu, October 8, 2026 at 9:00 AM EDT 5 min read AMZN -0.62% WMT +1.29% GOOG +0.24% MSFT +0.39% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Amazon (AMZN) earns a BUY rating with a $329 price target, implying 30% upside, backed by 58 of 60 analysts rating it a Buy.
Beyond AWS, Amazon's advertising grew 26% to $20B and its chips business hit a $25B run rate with triple-digit growth.
Walmart (WMT) trades at a higher P/E of 39 with just 4% margins, while Alphabet (GOOGL) trades at only 15x despite 82% Google Cloud growth.
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The 24/7 Wall St. price target for Amazon (NASDAQ:AMZN) is $329.19 over the next 12 months. With the stock at $253.83, that target means 29.7% upside. Amazon earns a buy rating with fairly high confidence from our model.
Most of the debate centers on AWS. The less-discussed story is everything around it. Advertising grew 26% to $19.8 billion last quarter, the chips business passed a $25 billion run rate with triple-digit growth, and Amazon Now gross sales grew more than 80% from the prior quarter. Of the analysts covering Amazon, 58 of 60 rate it a Buy or Strong Buy.
Amazon is up 2.9% over the past week, down 1.81% over the past month, and up 9.97% year to date. It stands 11.6% below its 52-week high of $287.20 and 29.5% above its low of $196.
Second-quarter revenue rose 19.6% to $200.61 billion, ahead of the $196.43 billion estimate. GAAP EPS of $5.75 included a $53.4 billion gain, mostly from Amazon's Anthropic stake. Excluding that gain, EPS came to about $1.88, slightly ahead of the $1.83 estimate.
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AWS grew 37% with a 39.4% operating margin. For the third quarter, Amazon guided operating income to $22.5 billion to $26.5 billion, compared with $17.4 billion a year earlier.
AWS backlog reached $496 billion, with Anthropic and OpenAI making "multi-year, multi-gigawatt commitments" to Trainium. CEO Andy Jassy said there is "a real chance" Amazon will sell Trainium chips to external customers.
Advertising is accelerating: shoppers clicking sponsored prompts "convert to a sale 48% more often." Amazon Business runs at $60 billion annualized gross sales. Zoox received NHTSA approval for paid robotaxi service. The bull case puts the stock at $378.81.
Trailing free cash flow is negative at -$7.6 billion. Amazon plans $200 billion in 2026 capex, and long-term debt rose to $119.1 billion from $65.6 billion. All of that expansion has to be powered, cooled, and networked by somebody, and we put seven of those suppliers in a free report on the companies behind the AI data-center boom.
Anthropic gains will not repeat, and tariffs add risk. Management says servers break even in "a little less than three years," with most AI capacity signed for "at least five-year terms." Even our bear case of $283.35 stands above today's price.
AWS's main cloud rival is Microsoft (NASDAQ:MSFT). Azure grew 43%, faster than AWS, but AWS is accelerating while Microsoft's stock trades at a lower multiple.
Competition in cloud and advertising also comes from Alphabet (NASDAQ:GOOGL). Google Cloud grew 82%, though its low P/E shows a $99.03 billion equity gain.
Walmart (NASDAQ:WMT) is Amazon's retail media rival. Its ad business grew 38%, yet Walmart trades at a higher P/E with much lower margins. The peer group supports our target.
The 24/7 Wall St. price target of $329.19 has a buy rating and 70% confidence. Higher-margin advertising and chip revenue are growing faster than retail.
The case strengthens if AWS keeps accelerating and capex converts to free cash flow by 2027. It weakens if spending rises while advertising or AWS growth slows. On balance, reward outweighs risk.
Here is where our model projects Amazon trading in the years ahead, assuming current growth and market conditions continue.
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