Amazon's Earnings Potential Looks Strong Over Next Three Years
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy AMZN?
Source: NASDAQ.COM
- Retail Growth: Amazon's North American sales grew 10% year-over-year in 2025, reaching $426 billion, with profit margins steadily increasing to 9%, indicating sustained competitiveness in e-commerce and expected further profit growth in the coming years.
- Cloud Services Strength: Amazon Web Services (AWS) achieved a 24% year-over-year growth rate in 2025, totaling $129 billion in sales, and with a planned $200 billion capital expenditure, AWS revenue is projected to approach $250 billion over the next three years, further solidifying its market leadership.
- Optimistic Earnings Outlook: If AWS and North American retail can achieve operating earnings of $75 billion and $50 billion respectively, the combined total would reach $125 billion, and with contributions from international retail, overall earnings could hit $150 billion, showcasing Amazon's robust profit potential.
- Attractive Market Valuation: With a current market cap of $2.2 trillion, Amazon's earnings ratio is projected to be under 15 based on future earnings estimates, indicating that the stock is relatively cheap today, making it a suitable buy for investors through 2026 and beyond.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
47 Analyst Rating
46 Buy
1 Hold
0 Sell
Strong Buy
Current: 199.600
Low
250.00
Averages
294.69
High
340.00
Current: 199.600
Low
250.00
Averages
294.69
High
340.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
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- Market Reaction: Despite the significant investment potential in AI, the market reacted negatively to both companies' spending plans, leading to stock price declines, which may present buying opportunities for long-term investors considering their strong competitive positions in high-return areas.
See More
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- Investor Strategy Adjustments: In light of market risks, investors may need to reassess their portfolios, considering a more balanced allocation between tech stocks and other sectors to mitigate potential losses.
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See More
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