Amazon shareholders might’ve felt a bit down in 2025, but hey, New Yorkers know the drill. We ride the ups and downs. Everyone thought AWS, the cloud computing gem in Amazon’s crown, would be the shining star of 2025. And it was, but the stock priced at 44 times forward earnings? That’s steep even by NY real estate standards.
2025 saw Amazon wrestling with its valuation, capping the year with a modest 5% rise, despite business booming. Fast forward to 2026, the scene looks brighter. With valuations settling and AWS poised to soar, this year could be the comeback we’re all hoping to see from Amazon.
It’s typical for folks to associate Amazon with its massive commerce arm, but that doesn’t tell the whole story. Commerce is what you see, but it’s AWS that’s bringing home the bacon. AWS, with its 35% operating margin in Q3, makes up only 18% of Amazon’s sales but accounts for 66% of the profits. That’s no small feat, especially here where margins mean everything.
Given these numbers, AWS isn’t just another part of Amazon’s business—it’s the linchpin. Its growth trajectory is something else, up 20% year over year in Q3, a figure that’s been unmatched in recent years. For a New Yorker, that’s like your favorite pizzeria staying open late: essential.
Here’s the kicker—stock prices across big tech are trading high, around 30 times forward earnings. But Amazon’s at 29 times now, close to its lowest since the early 2025 sell-off. If you’re thinking like a New Yorker, that’s your signal to pounce.
But wait, maybe hold off before diving headfirst into a stock buy. The folks over at The Motley Fool recently dropped their top 10 stock picks and—surprise—Amazon didn’t make the cut. Remember when they spotted Netflix in 2004? A $1,000 investment back then would’ve made you $464,439 today. Not bad, right? Or Nvidia buy-in 2005, now worth $1,150,455 from that same $1,000 stake.
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When considering Amazon, think beyond the storefront interface. It’s AWS that’s potentially powering the next big leap. And with valuations adjusting, this could be the golden window to jump in. As always, keep an eye on reports and whisperings from Wall Street. For now, as we say in the city, the ball is in your court.
Based on Keithen Drury’s insights, the Amazon story is far from over. How’s that for turning a stock’s slump into a potential headliner comeback?
[Image source: Getty Images]
[Data source: YCharts]
P.S. The Motley Fool’s disclosure policy reminds us to observe due diligence. Investing is a journey, and we’re just getting started. So, what’s your move?
