TLDR
- Amazon stock surged 12% in four trading days, adding over $300 billion in market value and hitting its first record high since February.
- AWS posted 20% revenue growth in Q3, its fastest quarterly growth since 2022, ending a long stretch of deceleration.
- Amazon secured a $38 billion cloud deal with OpenAI, strengthening its position in the AI infrastructure race.
- The stock trades at 27 times projected earnings, well below its 10-year average of 47 times, with analysts seeing room for the multiple to expand.
- All 42 Wall Street analysts covering the stock maintain “Buy” ratings, with an average price target implying 18% upside.
Amazon’s stock just had the kind of week that makes investors remember why they bought it in the first place. After months of worry about its cloud business losing ground, the company delivered results that flipped the narrative completely.
The stock climbed 12% over four trading sessions. That translates to more than $300 billion in added market value.
It also marked the first record high since February. The rally came after two major developments that reassured investors about Amazon’s most profitable division.
AWS reported 20% revenue growth in the third quarter. That’s the fastest expansion the cloud unit has posted since 2022.
Then came news of a $38 billion cloud infrastructure deal with OpenAI. Together, these events answered the question that had been weighing on the stock all year.
For much of 2025, investors watched nervously as AWS growth rates declined. Microsoft’s Azure and Google Cloud were gaining momentum. Oracle was making noise in the space too.
The third quarter results put those concerns to rest. AWS revenue climbed 20% year-over-year, breaking a pattern of slowing growth that had persisted for several quarters.
“Taken together, the results and OpenAI deal suggest that the acceleration in AWS growth could be sustainable,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
AWS generates far more operating income than Amazon’s retail operations. Its performance directly impacts how investors value the entire company.
Valuation Reset Creates Opportunity
Despite the recent rally, Amazon still lags behind the broader market this year. The stock is up about 14% year-to-date.
That compares to 16% for the S&P 500 and 22% for the Nasdaq 100. Among the Magnificent Seven tech stocks, Amazon trails Nvidia, Microsoft, and Alphabet.
The valuation picture tells an interesting story. Amazon trades at about 27 times projected earnings.
That’s well below the 10-year average multiple of 47 times. In mid-October, the valuation briefly fell below 24 times for just the second time since the 2008 financial crisis.
Evercore ISI analyst Mark Mahaney thinks the stock could nearly double if the earnings multiple returns to historical levels. “With materially increasing odds that AWS has recovered to becoming a sustainably 20%+ revenue growth segment, the stock opportunity ahead is for a material AMZN re-rating,” he wrote.
Analysts expect AWS revenue growth to continue expanding in the next two quarters. Earnings estimates for 2026 have climbed 2.5% over the past week.
Competition Heats Up in Cloud Infrastructure
The OpenAI deal puts Amazon back in direct competition with Microsoft, Alphabet, and Oracle for AI infrastructure spending. All four companies reported strong cloud growth recently, but Amazon remains the largest player by market share.
Microsoft and Alphabet also delivered solid cloud unit results last week. Oracle showed rapid gains in early September, despite having the smallest market share of the group.
Matt Tuttle, CEO of Tuttle Capital Management, sees Amazon’s recent underperformance as a reason to buy. “The cloud business is back, and if you look around the Mag 7 landscape, I think Amazon has gone from the laggard to the leader,” he said.
Wall Street remains firmly bullish. All 42 analysts who issued ratings in the past three months recommend buying the stock.
The average 12-month price target stands at $295.35. That implies 18% upside from current levels.
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