Key Highlights
- Barclays forecasts Amazon to lead mega-cap technology stocks through AWS expansion.
- AWS AI services reached a $15 billion annualized revenue run rate.
- Amazon’s custom semiconductor division achieved a $20 billion run rate, experiencing 100% growth in three months.
- AMZN forward P/E stands at 32, representing historic value and trading below Walmart and Costco multiples.
- AWS posted 24% revenue growth year over year in the most recent quarter, marking the fastest expansion in over three years.
Wall Street is taking a closer look at Amazon. Analysts at Barclays believe AMZN stands positioned to lead the Magnificent 7 group during the coming months, citing rapid expansion at AWS and an increasingly powerful semiconductor operation.
The British financial institution stated in a research note that recent performance metrics provide “confidence around AWS upside from AI over coming years.” Barclays described Amazon as “one of the more highly debated stocks” within its research universe while noting a compelling bullish case is emerging.
This investment thesis received substantial validation recently. Amazon revealed that AWS has achieved a $15 billion annualized revenue run rate specifically from AI services. The tech giant also intends to deploy more than one million Nvidia processors through 2027.
Barclays calculates that full deployment of these processors could generate $100 billion in annual AWS revenue. This projection represents a significant factor behind growing analyst confidence in the stock.
Amazon’s Underappreciated Semiconductor Expansion
Amazon’s proprietary chip business is experiencing remarkable growth with minimal public attention. The division now generates a $20 billion external revenue run rate after doubling within a three-month period. Including internal utilization, Amazon characterizes this as approaching a $50 billion enterprise.
Along with its Trainium AI processors, Amazon is engineering proprietary CPUs. As agentic AI applications proliferate, CPUs are emerging as a critical constraint, and Amazon is establishing itself ahead of this shift.
AWS revenue increased 24% year over year during the latest quarter — representing the strongest growth rate in more than three years. Amazon constructed a substantial facility for AI collaborator Anthropic that became operational in Q4, further accelerating cloud infrastructure demand.
Compelling Valuation Metrics
AMZN’s forward P/E ratio currently registers at 32. While this exceeds the prior year’s low of 24, it remains historically attractive for the company. Amazon’s trailing P/E has exhibited a downward trend throughout much of the previous decade.
Perhaps more compelling is how Amazon currently trades at a valuation discount to Walmart and Costco within the retail sector — even while delivering faster revenue and profit growth than both competitors.
North American operating margin reached 9% in Q4, advancing from 8% during the year-ago period. This efficiency gain drove a 24% increase in North American operating income on merely a 10% revenue rise.
Robotics and artificial intelligence are enhancing Amazon’s e-commerce operational efficiency. Robust expansion in its high-margin sponsored advertising business is additionally elevating profitability.
Amazon’s grocery division surpassed $150 billion in U.S. gross sales during 2025, establishing it as the nation’s second-largest grocer after Walmart.
AMZN stock holds a consensus Strong Buy rating from 46 Wall Street analysts — 43 Buys and three Holds. The average price target of $284.09 suggests approximately 15% upside potential from present levels.
AMZN is currently trading at $254.29, up 1.84% on the day, near its 52-week high of $258.60.
