Amazon: AWS, AI Chips, & Retail Expansion Spur Growth
Amazon Company Overview
Zacks Rank #3 (Hold) Amazon (AMZN)is the leading e-commerce company, with operating sprawling across North America and the globe. The company’s online retail business revolves around the Prime program and a vast and efficient distribution network which delivered its fastest delivery speeds in 2025. Moreover, Amazon established a footprint in the physical grocery business with its Whole Foods Market acquisition. Additionally, Amazon enjoys a dominant position in the cloud computing market, particularly in the Infrastructure as a Service (IaaS) space, thanks to Amazon Web Services (AWS), which is one of its high-margin generating businesses. Amazon has also diversified into the custom AI chip business, and its Trainium and Graviton chips now produce a combined annual revenue run rate of more then $10 billion.
Amazon’s International Expansion Supports Growth
After gaining a dominant position in the North American e-commerce market, Amazon is applying its winning blueprint internationally. Amazon is investing in cross-border logistics, faster delivery networks and localized marketplace features across Europe, Asia, and Latin America, positioning it to capitalize on areas where digital retail penetration remains comparatively low.
Amazon Has a Durable Business
Although most investors think of the e-commerce business when they think of Amazon, the company has successfully diversified its revenue stream across several high-growth businesses. For example, in Q3, AWS sales increased 39% year-over-year while retail grew 6% and advertising grew 10.9%. Meanwhile, Amazon gross margins jumped to 51.4%, its highest level ever.
Amazon Benefits from the AI Boom
According to the latest guidance, big tech capital expenditures are expected to soar to $1.4 trillion in 2027 (+60% YoY).
As a primary supplier of AI infrastructure to enterprise customers, Amazon will benefit dramatically from the rampant AI spending. Meanwhile, management noted that commitments for custom chips exploded 20-fold year-over-year.
Amazon Delivers Dependable Growth
While many stocks can deliver the occasional double-digit revenue growth quarter or year, Amazon has done it consistently. Revenues have grown each year over the past 5 years and are expected to be close to $1 trillion next year.
Amazon Technical View
Last week, Amazon staged a classic high-volume bear trap/shakeout after briefly crashing below the 200-day moving average and recovering it.
