The world’s largest e-commerce and cloud infrastructure company continues to demonstrate significant growth potential, even as it faces competitive pressures. Amazon (AMZN) has seen its stock price surge approximately 170% over the past three years, vastly outperforming the S&P 500, which has increased by less than 80%. As analysts ponder Amazon’s ability to sustain this momentum, a closer examination of its various revenue streams and market influences reveals both opportunities and challenges.
Amazon’s primary revenue driver is its retail business, which operates dedicated e-commerce marketplaces across more than 20 countries. Additionally, the company has a foothold in traditional retail through its Whole Foods Market and a limited number of Amazon-branded brick-and-mortar stores. However, the company’s profitability is primarily fueled by Amazon Web Services (AWS), the dominant player in the cloud infrastructure market, capturing 32% of the sector—well ahead of its closest competitors, Microsoft’s Azure (22%) and Alphabet’s Google Cloud (11%). In the first nine months of 2025, AWS contributed 18% of Amazon’s net sales but accounted for an impressive 60% of its operating profit.
AWS allows Amazon to widen its Prime subscription ecosystem, enhancing member benefits through steep discounts, free shipping, streaming media, and other loss-leading strategies. Currently, Prime serves over 240 million paid members, creating a robust customer base that strengthens Amazon’s competitive edge. Additionally, Amazon’s advertising segment—responsible for 9% of its revenue—has potential to evolve into a secondary profit engine alongside AWS.
Despite setbacks in 2022, when inflation dampened consumer spending and slowed cloud investments led to a drop in operating margins and a reliance on investments like Rivian, the company has rebounded impressively. Over the subsequent three years, Amazon has returned to double-digit net sales growth, with significant expansions in both operating margins and earnings per share (EPS). Analysts have noted improvements in retail due to enhanced delivery speeds and a resurgence in cloud spending driven by the generative AI boom.
Looking ahead, from 2024 to 2027, analysts anticipate Amazon’s revenue and EPS to grow at compound annual growth rates (CAGR) of 12% and 20%, respectively. The company’s stock remains reasonably valued at 29 times its estimated 2026 earnings. If Amazon meets these projections and achieves a 15% EPS CAGR through 2029, its stock could rise over 60% in the next three years, outstripping the S&P 500’s anticipated average annual return of about 10%.
While Amazon contends with fierce competition from giants like Walmart and emerging discount platforms such as PDD’s Temu, its established scale, customer loyalty, and the backing of high-margin AWS and advertising sectors position it favorably for sustained long-term growth. This scenario suggests that Amazon remains a compelling growth stock for investors looking towards 2026 and beyond.
