Key Takeaways
- Barclays expects Amazon to surpass other mega-cap technology companies, fueled by AWS momentum.
- AWS reached a $15 billion annual run rate for artificial intelligence services.
- The company’s custom chip division now generates a $20 billion run rate, after doubling within three months.
- AMZN’s forward price-to-earnings ratio stands at 32, representing historical value and a discount versus Walmart and Costco.
- AWS recorded 24% revenue growth year-over-year in the most recent quarter, marking its strongest expansion in over three years.
Amazon is capturing renewed interest from the investment community. Analysts at Barclays suggest AMZN is positioned to surpass the remaining Magnificent 7 stocks in upcoming months, highlighting robust momentum in AWS and a rapidly scaling chip operation.
The UK-based financial institution stated in a research note to clients that recent performance indicators provide them with “confidence around AWS upside from AI over coming years.” Barclays characterized Amazon as “one of the more highly debated stocks” under its research umbrella while noting an increasingly compelling bullish narrative.
That investment case received tangible support through recent disclosures. Amazon revealed that AWS has achieved a $15 billion annualized revenue run rate exclusively from AI-related services. The technology giant additionally intends to install over one million Nvidia processors through 2027.
Barclays projects that upon full deployment, this processor infrastructure could generate $100 billion in yearly AWS revenue. This substantial figure underpins analysts’ growing conviction regarding the stock’s prospects.
The Under-the-Radar Chip Revenue Surge
Amazon’s proprietary chip operation is experiencing rapid — yet relatively unnoticed — expansion. It currently maintains a $20 billion external revenue run rate and has experienced a doubling within merely three months. Accounting for internal usage, Amazon indicates the business approaches $50 billion in total value.
In addition to its Trainium AI processors, Amazon is engineering proprietary CPUs. As agentic AI applications proliferate, CPUs are emerging as a fresh constraint, and Amazon is strategically positioning itself for this evolving demand.
AWS revenue expanded 24% year-over-year in the latest quarter — representing its most vigorous growth rate in over three years. Amazon completed construction of a substantial facility for AI collaborator Anthropic that became operational in Q4, further stimulating cloud infrastructure demand.
Compelling Valuation Metrics
AMZN’s forward price-to-earnings multiple currently registers at 32. While elevated compared to last year’s trough of 24, this remains historically attractive for the company. Amazon’s trailing P/E ratio has demonstrated a downward trajectory throughout much of the previous decade.
Perhaps more noteworthy is Amazon’s valuation discount relative to Walmart and Costco within the retail sector — notwithstanding faster revenue and profit expansion than both competitors.
North American operating margin reached 9% in Q4, advancing from 8% in the prior-year period. This enhancement generated a 24% surge in North American operating income despite only a 10% sales increase.
Automation technologies and artificial intelligence are enhancing Amazon’s e-commerce operational efficiency. Robust expansion in its lucrative sponsored advertising segment is simultaneously contributing to margin improvement.
Amazon’s grocery operations surpassed $150 billion in U.S. gross sales during 2025, establishing it as the nation’s second-largest grocer after Walmart.
AMZN stock maintains a consensus Strong Buy rating from 46 Wall Street analysts — comprising 43 Buy recommendations and three Hold ratings. The mean price target of $284.09 suggests approximately 15% appreciation potential from present levels.
AMZN is presently trading at $254.29, gaining 1.84% during the session, approaching its 52-week peak of $258.60.
