After a year defined by cloud growth and concerns about the impact of pricing on retail, Amazon stock heads into 2026 poised for a rally. The club name struggled throughout 2025 as Wall Street worried about Microsoft’s Azure and Google Cloud outpacing the growth of the No. 1 cloud, Amazon Web Services, and how President Donald Trump’s tariffs could squeeze already thin retail margins. This also weighed on the market. Amazon stock has only risen 6% since the beginning of the year, lagging the S&P 500 index, which has risen nearly 18% over the same period. The stock also underperformed large-cap tech stocks. Amazon Overview Year-to-date performance: Up 6% Forward price-to-earnings ratio: 28.9 vs. 5-year average 44.3 Our rating: Buy equivalent 1 rating Our price target: $275 per share AMZN YTD Mountain AMZN Stock Price Performance YTD. But Amazon may have turned a corner in the third quarter. At that time, AWS re-accelerated to 20% revenue growth. This is the fastest record since 2022. This is one of the main reasons why Investment Club considers Amazon one of the top 5 stocks poised to rise in 2026. Analysts continue to have confidence in Amazon, too. Earlier this month, TD Cowen named Amazon a top Internet large-cap stock pick for 2026, citing three growth drivers: continued reacceleration of AWS growth, stronger e-commerce and advertising momentum, and continued profit growth from advertising. In fact, analysts pointed to advertising as an “underappreciated” bright spot. TD Cowen said Amazon’s advertising business, already one of the company’s most profitable, expects Prime Video to give it even more growth. With the expansion of live sports rights, including Thursday Night Football and one NFL playoff game to be streamed in January, analysts argue that Prime Video could become “a major driver of Amazon’s advertising business in the coming years” as more viewing shifts to streaming and performance-based advertising. On the retail side, Amazon continues to deepen the value of Prime membership through faster shipping. Same-day delivery of fresh produce is now in more than 2,300 cities and towns, with further expansion planned for 2026. The company introduced free same-day grocery delivery on orders over $25, gradually moving Amazon closer to Walmart. Still, the biggest factor in Amazon’s comeback is its cloud computing business, which also drives its profits. A central question for investors in 2026 is whether Amazon can bring its AI infrastructure online fast enough to meet demand. Amazon has announced plans to double its data center capacity by 2027, following years of supply constraints that have held back cloud growth. But its realization depends on solving power availability issues. If Amazon can demonstrate a consistent capacity picture, maintain AWS growth momentum, and continue to expand advertising and retail efficiencies, we believe we could see a meaningful inventory recovery in 2026. (The Jim Cramer Charitable Trust is long AMZN, MSFT. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
