From Retail Darling to AI Powerhouse, This $2.4 trillion Growth Stock Is a Great Buy
Few companies in history have been as effective at reinventing themselves as Amazon (AMZN). In 2025, Amazon is gradually being recognized not only as a retail giant but also as a powerhouse in artificial intelligence (AI). This shift could fuel its next era of trillion-dollar growth.
Sitting at a market cap of around $2.4 trillion, Amazon has solidified itself as one of the world’s most valuable companies, and its dynamic business strategy suggests that it still has an opportunity to grow.
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While retail remains Amazon’s core business, its future lies in Amazon Web Services (AWS), its cloud computing division now powered by AI. AWS generated a 17.5% year-over-year (YoY) revenue increase in Q2 to $30.9 billion and now has an annualized run rate of $123 billion. AWS is emerging as a global leader in generative AI, with a business that is already worth billions of dollars and growing at triple-digit rates year after year. Amazon’s AI infrastructure, powered by its Trainium 2 custom chips and powerful Nvidia Grace Blackwell Superchip EC2 instances, is drawing large customers such as Anthropic, which is developing its latest models on AWS. On the software side, Amazon Bedrock, which enables enterprises to modify models for speed, affordability, and domain-specific expertise, is also in high demand.
What’s even more impressive is that Amazon is also tackling one of the trickiest challenges in AI, which is building and deploying agents. The launch of Strands and Agent Core provides enterprises with tools to securely and scalably create AI agents. Meanwhile, AWS is releasing more advanced AI apps, such as AWS Transform (for IT transformation) and Curo, a next-generation coding agent. Notably, AWS continues to dominate the global cloud computing market, with a 30% share, followed by Microsoft Azure and Google Cloud.
Amazon’s AI agenda goes much beyond AWS. Alexa Plus, its generative AI-powered assistant, is now in the hands of millions of users in the U.S., and the company says that early feedback has been encouraging. Meanwhile, Amazon’s satellite broadband program, Project Kuiper, has completed three successful launches, with industry and government customers lined up for commercial deployment.
Amazon’s core retail business remains as robust as ever, powered by the inputs that customers value most: selection, cheap pricing, and fast delivery. Its logistics efforts are paying off in terms of size and efficiency, with robotics and automation driving improvements. In Q2, Amazon delivered 30% more items same-day or next-day than the previous year, establishing a new global speed record. North American and international revenue both climbed 11% each YoY in Q2. The deployment of Amazon’s one millionth robot, paired with breakthroughs such as Deepfleet AI, which improves robot travel efficiency by 10%, is lowering costs, increasing safety, and accelerating deliveries.
Advertising remains a fast-growing and high-margin business. Revenue climbed by 22% YoY, thanks largely to sponsored products and high traffic in Amazon’s online stores. Amazon’s capacity to scale in retail, cloud, advertising, and AI is translating into long-term profitability. In the second quarter, the tech giant reported $167.7 billion in total revenue, up 12% YoY, with a 33% increase in net income to $1.68 per share.
Amazon’s capital expenditures totaled $31.4 billion in Q2. Management anticipates this level to remain consistent for the rest of the year as the company invests heavily to maintain its growth trajectory. The company generated free cash flow of $18.2 billion for the trailing twelve months. Amazon also held $70 billion in cash, equivalents, and restricted cash at the end of Q2.
Analysts who cover Amazon expect its revenue to rise by 11% to $708 billion in 2025, followed by a 20.2% increase in earnings. Revenue and earnings could further increase by 10.1% and 14.3% in 2026. Currently, AMZN stock is trading at 30x forward earnings, lower than its five-year historical average P/E of 170x.
On Wall Street, the consensus “Strong Buy” rating for AMZN stock comes as no surprise. Out of the 55 analysts that cover the stock, 47 rate it a “Strong Buy,” six rate it a “Moderate Buy,” and two rate it a “Hold.” While Amazon stock has just climbed 6% year-to-date, analysts expect the stock to climb another 15% based on its mean target price of $265.19. Furthermore, its Street-high estimate of $305 implies upside of 32% over the next 12 months.
Amazon is no longer simply the world’s largest online retailer. It is an AI-first powerhouse with booming operations in retail, advertising, cloud, and logistics, as well as a stronger long-term growth position than ever before. This $2.4 trillion giant still has plenty of runway ahead and looks like one of the best growth stocks to buy in the market today for long-term investors.
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On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
