Key Takeaways
- Barclays forecasts Amazon to surpass fellow mega-cap technology companies, powered by AWS expansion.
- AWS achieved a $15 billion annualized run rate for artificial intelligence services.
- The company’s proprietary chip division reached a $20 billion run rate, doubling over a three-month period.
- AMZN’s forward P/E ratio stands at 32, representing a historical low and trading below Walmart and Costco.
- AWS delivered 24% year-over-year revenue growth in the latest quarter, marking its strongest performance in three years.
Wall Street is turning increasingly bullish on Amazon. Analysts at Barclays have identified AMZN as positioned to exceed the performance of other Magnificent 7 members in coming months, citing robust momentum in AWS and a rapidly expanding custom semiconductor operation.
In a research note to clients, the U.K.-based investment bank expressed growing conviction that recent performance indicators support “confidence around AWS upside from AI over coming years.” While Barclays acknowledged that Amazon remains “one of the more highly debated stocks” under its coverage, the firm stated that a compelling bullish narrative is taking shape.
That investment case received validation through recent company disclosures. Amazon revealed that AWS has achieved a $15 billion annualized revenue run rate exclusively from artificial intelligence services. Additionally, the tech giant intends to deploy over one million Nvidia processors through 2027.
According to Barclays’ projections, full deployment of this processor infrastructure could generate $100 billion in annual AWS revenue. This substantial figure underpins the increasing analyst optimism surrounding the stock.
Amazon’s Under-the-Radar Semiconductor Success
The company’s custom chip division is experiencing rapid expansion with minimal fanfare. This business segment now generates a $20 billion external revenue run rate, having doubled its size within a mere three-month span. When accounting for internal consumption, Amazon estimates the total business value approaches $50 billion.
In addition to its Trainium artificial intelligence processors, Amazon is engineering proprietary CPUs. As agentic AI applications proliferate, CPUs are emerging as a new performance constraint, and Amazon is strategically positioning itself to address this evolving demand.
AWS posted 24% year-over-year revenue growth in the most recent quarter — representing its most robust expansion rate in over three years. The cloud division benefited from bringing a major facility online for AI partner Anthropic during Q4, further stimulating cloud infrastructure demand.
Compelling Valuation Metrics Emerge
AMZN currently trades at a forward P/E multiple of 32. While this represents an increase from last year’s trough of 24, it remains historically modest for the company. Amazon’s trailing P/E ratio has followed a downward trajectory throughout much of the previous decade.
Perhaps more notable is Amazon’s valuation discount relative to Walmart and Costco within the retail sector — despite delivering faster growth rates in both revenue and profitability compared to both competitors.
North American operating margin reached 9% in Q4, climbing from 8% in the prior-year period. This margin enhancement fueled a 24% surge in North American operating income despite only 10% sales growth.
Automation technologies and artificial intelligence are driving operational efficiency gains across Amazon’s e-commerce infrastructure. Meanwhile, substantial growth in its high-margin sponsored advertising segment continues elevating overall profitability.
Amazon’s grocery operations surpassed $150 billion in U.S. gross sales during 2025, establishing the company as America’s second-largest grocer, trailing only Walmart.
AMZN stock holds a consensus Strong Buy rating from 46 Wall Street analysts — comprising 43 Buy recommendations and three Hold ratings. The average analyst price target of $284.09 suggests approximately 15% upside potential from present trading levels.
AMZN is currently priced at $254.29, representing a 1.84% daily gain, trading near its 52-week peak of $258.60.
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