One stock appears to be lagging in 2025 and could represent a significant opportunity moving forward.
Choosing just one stock from a limited selection doesn’t quite mirror reality. You can actually invest in as many stocks as you want, whenever you like.
That said, this kind of analysis can be beneficial. Evaluating a company’s strengths and weaknesses, and comparing potential investments, can provide valuable insights.
With that in mind, I recently compared the stocks in the Magnificent Seven. One stands out as a leading candidate for 2026: Amazon (AMZN +0.06%). Here’s why:
Four reasons to consider buying Amazon stock soon
Don’t get me wrong—alongside other Mag-7 stocks like Nvidia, Microsoft, and Alphabet, Amazon is still a sound investment. However, on a risk-reward basis, it stands out as the best prospect for 2026 for several interrelated reasons.
1. Recent underperformance means lower prices
Just because a stock is underperforming doesn’t automatically mean it’s a bad choice. Conversely, it’s often wise to buy blue-chip stocks when their prices are lower.
In 2025, Amazon’s stock has increased by nearly 18%, compared to just below 6% for the latest S&P 500 figures and over 22% for the Nasdaq Composite.
That’s a noticeable gap, enough to attract those looking for a bargain.
2. Recent declines don’t reflect true financial health
Of course, having a weak stock price isn’t alone a reason to invest. Many stocks face periods of underperformance.
This likely isn’t one of those situations. Amazon’s revenue is projected to grow by 12% year-over-year in 2025, with earnings per share rising from $5.53 last year to $7.06, which is around 28% growth. The company has mostly met or exceeded its sales and profit targets. While its cloud computing sector has faced some challenges, those setbacks were partly due to unreasonably high expectations and tariff-related issues that have proven less persistent than initially thought.
3. Anticipated surge in profit growth
This is just the beginning. Profit growth is expected to pick up significantly through 2029.
Yes, cloud computing—which accounts for about two-thirds of Amazon’s operating profit—will be important for future growth. However, it’s not the sole driver. Interestingly, as Amazon’s advertising business has grown, its traditionally low-margin e-commerce segment has also seen expanding margins. In fact, advertising can be a more lucrative way to generate revenue than product sales.
4. Agility in adapting to change
Lastly, and perhaps most crucially, Amazon remains a compelling buy in 2026 because of its consistent adaptability.
Shifting focus to advertising strategies is just one example of this. There was a time when the company didn’t even have a cloud computing division, nor did it have the Prime program offering free shipping. New partnerships, like the one with Hertz for online car sales, show how Amazon is leveraging its extensive reach while mitigating risks to its brand.
Of course, not all innovations have been hits. For instance, the Fire smartphone and a restaurant delivery attempt named Amazon Restaurants didn’t pan out as expected.
However, enough of these ventures succeed to keep growing revenues and offset the failures. This flexibility enables Amazon to seize opportunities as they arise.
The rise outweighs the fall
That said, it’s not a guarantee that Amazon will outperform the Magnificent Seven in 2026. It’s possible things may still be sluggish next year. In the investing world, certainty is elusive.
However, from a risk-reward perspective, Amazon stock currently stands out among the Mag-7 options. The struggles it faced this past year, particularly in cloud computing, have overshadowed the company’s underlying performance and growth trajectory. More investors are beginning to recognize this, so it’s worth keeping an eye on how this stock might rebound from its 2025 slump.
