Amazon tends to fall short of what Wall Street anticipates, which might mean its stock is currently undervalued.
Among American companies, nine are valued at over $1 trillion, yet only four have reached the coveted $3 trillion mark: Nvidia, Apple, Alphabet, and Microsoft.
There’s a possibility that Amazon (AMZN 0.20%) could join this elite group by the end of 2026, fueled by rapid growth in its cloud computing sector and increasing profits from its traditional e-commerce operations. As of now, the company’s market capitalization sits at $2.48 trillion. Should it reach $3 trillion, those who purchase stock today might see a return of about 21% next year.
Continue reading to explore Amazon’s potential growth in the coming year.
Concentration on Amazon Web Services
Amazon’s journey towards the $3 trillion threshold hinges significantly on Amazon Web Services (AWS), the front-runner in cloud computing. Originally designed for data storage and digital application hosting, AWS has transformed into a central pillar of Amazon’s artificial intelligence (AI) strategy.
The platform operates cutting-edge data centers that provide computing power to AI developers lacking resources to establish their own setup. These centers are equipped with advanced chips from providers like Nvidia, alongside Amazon’s own chips, Inferentia and Trainium. Notably, companies like Anthropic utilize vast quantities of the latest Trainium2 chips, which boast up to 40% superior performance compared to competing hardware for training AI models.
AWS also includes the AWS Bedrock platform, which facilitates access to solutions from both Anthropic and Meta. Creating models from scratch can be taxing and expensive, so leveraging existing solutions enables companies to expedite their AI initiatives.
In the third quarter of 2025, AWS reported record revenues of $33 billion, marking a 20% year-over-year increase—the highest growth since late 2022. Moreover, AWS has an impressive $200 billion backlog, indicating robust demand for additional data center capacity, suggesting that strong sales are likely to persist.
Amazon’s profits consistently exceed expectations
AWS contributed $33 billion in revenue during the third quarter, which represented just 18% of Amazon’s total revenue of $180 billion. Still, the cloud segment remains the company’s most profitable, providing 65% of its overall operating profit. While e-commerce remains the largest revenue generator for Amazon, its profit margins are notably thin, largely due to the focus on high-volume, low-cost sales through Amazon.com.
In 2023, Amazon initiated efforts to enhance the profitability of its e-commerce operations through improved efficiency and technology implementations. By restructuring its U.S. logistics network into eight distinct regions, each fulfillment center can cater to a specific geographic area. This adjustment allows for shorter delivery distances, ultimately cutting down on shipping and packaging expenses.
Additionally, the company employs AI-driven tools like Project Private Investigator in its fulfillment centers. This technology uses computer vision to detect defective items before they’re shipped, reducing both returns and refunds, and hence driving down costs.
The combination of rapid AWS growth and increased e-commerce efficiency has led to substantial profit gains for Amazon. By the end of the first three quarters of 2025, the company reported earnings of $5.22 per share, which marked an impressive 42% rise compared to the previous year. Moreover, Amazon’s profitability consistently outperformed Wall Street expectations by an average of 22% each quarter this year.
Pathway to $3 trillion in 2026
Currently, Amazon’s stock has a price-to-earnings ratio (P/E) of 32.8, closely aligning with the Nasdaq-100 index, which stands at 32.1. This means Amazon’s stock is relatively fair-priced in comparison to its technology sector counterparts.
As per Wall Street consensus (as seen on Yahoo! Finance), it’s projected that Amazon could bring in earnings of $7.86 per share by 2026, leading to a forward P/E of 29.6.
To maintain its current P/E ratio, Amazon’s stock would need to increase by 11% next year, bringing its market cap to $2.75 trillion. However, it’s worth noting that Amazon often surprises Wall Street with its performance.
If 2026 earnings exceed expectations by 22%, similar to the trend in 2025, the stock price could experience a rise of 35% instead. Should this occur, Amazon’s market value could soar to approximately $3.35 trillion.
Ultimately, even a profit margin of just 9% next year could secure Amazon’s place in the $3 trillion club. Given the significant momentum in both its e-commerce and AWS sectors, this target seems quite achievable.
