AMZN -2.32% NVDA -1.62% 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's (NASDAQ: AMZN) stock closed at its all-time high of $284.02 per share on Aug. 3, 2026. Today, it trades at about $254. Let's see why it pulled back about 11% -- and how one number could drive it higher or lower when it posts its third-quarter earnings on Oct. 29.
Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Amazon is the world's largest e-commerce and cloud infrastructure company. It generates most of its revenue from its retail business, but most of its operating profits come from Amazon Web Services (AWS), the world's largest cloud infrastructure platform.
AWS already hosts tens of millions of websites and apps, making it the backbone of the internet. It also hosts Bedrock, a managed service that enables organizations to build their own AI apps, SageMaker, a platform for training custom AI models, and a wide range of customized AI APIs. To support the growth of that AI ecosystem, Amazon is producing its own AI accelerator chips. Anthropic, in which Amazon owns a major stake, is one of AWS' leading customers.
AWS' year-over-year revenue growth has accelerated significantly over the past year, and its 36.7% growth in the second quarter marked its strongest growth in 18 quarters.
The AI market's explosive expansion drove AWS' growth, and analysts expect the segment's revenue to grow 30%-35% year over year in the third quarter. If it exceeds that range and accelerates for another consecutive quarter, its stock could soar higher. But if it falls short of that range, its stock could stumble -- since it's allocating most of its projected capex of $220 billion this year toward the expansion of AWS' AI infrastructure.
From 2025 to 2028, analysts expect Amazon's revenue and EPS to grow at CAGRs of 15% and 25%, respectively. Its stock still looks reasonably valued at 24 times next year's earnings -- but it could command a higher valuation if it's revalued as a high-growth AI infrastructure stock.
That's why investors should keep a close eye on AWS' growth rates in the third quarter, and whether or not Amazon raises its capex guidance again to support that expansion. If it maintains its high growth rates without significantly boosting capex, its stock could reach new highs in the near future.
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $391,581!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,334,780!*
Now, it's worth noting Stock Advisor's total average return is 936% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 16, 2026.
Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
Amazon Is 11% Below Its High Heading Into Earnings on Oct. 29. Here's the 1 Number That Will Decide What Happens Next. was originally published by The Motley Fool
