The Next Big Rally in Amazon.com Stock Could Start Like This
AMZN has shown powerful rallies, with more than 30% gains in under two months on 13 occasions, notably in 2010 and 2020. These swift upswings have delivered significant returns for investors. If past trends hold, upcoming catalysts might drive Amazon stock to remarkable new peaks, offering potential for substantial shareholder rewards.
Despite a recent market wobble, Amazon’s stock has risen over the past year, poised for further upside as its formidable AWS division, buoyed by multi-billion dollar AI infrastructure investments and surging Q3 revenue growth, continues to fuel profitability. Should these strategic bets in generative AI and resilient cloud adoption solidify their market lead against fierce competition, and e-commerce innovations attract even more loyalty, the path to re-accelerated shareholder value appears clear.
Triggers That Could Boost The Stock
- AWS AI Growth: AWS Q3 2025 revenue grew 20% to $33 billion, its fastest since 2022. Amazon is investing $125 billion in 2025 AI infrastructure, with Trainium2 chips seeing 150% QoQ growth.
- Ad Revenue Surge: Advertising revenue grew 24% to $17.7 billion in Q3 2025 and is projected to top $90 billion within two years, establishing a high-margin, market-leading position.
- Efficiencies & Health: Underlying Q3 2025 operating income would be $21.7 billion excluding one-time charges. Improved retail logistics and expanding healthcare initiatives (One Medical, Health Condition Programs) boost margins.
How Strong Are Financials Right Now
Below is a quick comparison of AMZN fundamentals with S&P medians.
- Revenue Growth: 10.9% LTM and 11.3% last 3-year average.
- Cash Generation: Nearly 2.0% free cash flow margin and 11.4% operating margin LTM.
- Valuation: Amazon.com stock trades at a P/E multiple of 33.5
| AMZN | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Broadline Retail | – |
| PE Ratio | 33.5 | 22.9 |
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| LTM* Revenue Growth | 10.9% | 6.1% |
| 3Y Average Annual Revenue Growth | 11.3% | 5.4% |
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| LTM* Operating Margin | 11.4% | 18.8% |
| 3Y Average Operating Margin | 7.9% | 18.2% |
| LTM* Free Cash Flow Margin | 2.0% | 13.5% |
*LTM: Last Twelve Months | If you want more details, read Buy or Sell AMZN Stock.
Amazon.com demonstrates solid fundamental strength, supported by consistent double-digit revenue growth and healthy operating and free cash flow margins. However, despite these positive indicators, it is important to consider the investment risk related to how the stock might perform during broader market downturns.
Risk Quantified
When thinking about risk, it helps to look at how Amazon has reacted in tough market times. It plunged nearly 94% during the Dot-Com Bubble, which is massive. The Global Financial Crisis hit it for about 65%, and the Inflation Shock during 2022 wasn’t kind either, with a drop of over 56%. Even the less severe events, like the 2018 correction and the Covid selloff, still knocked it down by around 34% and 23%, respectively. So, even with all the positives, Amazon’s history shows it can still take big hits when the market turns south.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read AMZN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Still not convinced about AMZN stock? Consider portfolio approach.
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