Amazon’s stock has recently shown remarkable recovery, rising from approximately $199 at the end of March to around $264. This resurgence is largely attributed to substantial momentum in its cloud computing division, Amazon Web Services (AWS), which management highlighted during a recent earnings call. This information raises belief in the stock’s potential for further growth, with some analysts suggesting that a $10,000 investment today could double within four years.
While Amazon’s retail sector remains the largest source of revenue, AWS has emerged as the company’s most profitable segment. In the first quarter of 2026, AWS revenue reached $37.6 billion—a 28% year-over-year increase and its fastest growth rate in over three years. Currently, AWS is operating at an annualized pace of $150 billion, holding a commanding 29% market share in the cloud market, according to Synergy Research. CEO Andy Jassy remarked on the unusual nature of such rapid growth from such a substantial base.
The increasing demand for AI tools significantly contributes to AWS’s popularity. Customers are gravitating toward AWS for its comprehensive suite of AI capabilities, including SageMaker for model development and Bedrock for managing AI-driven tasks. In the last quarter alone, customer spending on Bedrock surged by 170% year over year.
The growth of AWS also paves the way for a notable revenue stream as Amazon transitions into the semiconductor sector. The company’s custom-designed chips, Trainium and Graviton, generated an impressive $20 billion in annualized revenue, growing at a rapid pace. Jassy indicated that if Amazon were to treat its chip segment as a standalone business, it could potentially generate up to $50 billion annually. The long-term prospects for this revenue stream could be substantial, potentially reaching hundreds of billions of dollars.
Amazon’s history of capital expenditure increases in response to growth opportunities supports this potential. The company has committed to $200 billion in capital expenditures by 2026, up from $131 billion in 2025. Although this increase may impact short-term free cash flow, investments in durable assets like data centers can yield significant returns over decades, with chips generally maintaining a utility of five years or more.
The company has also secured over $225 billion in revenue commitments for its Trainium chips. The performance of Trainium2 is reported to be about 30% better than comparable GPUs, resulting in significant demand.
In comparison, Amazon’s online retail division generated $276 billion in trailing 12-month revenue, but its growth has slowed to single-digit rates. It stands to reason that the revenue from the chip business could outpace that of its e-commerce division in the coming years.
While potential challenges exist—such as market volatility or regulatory hurdles that could hamper the pace of AWS’s growth—the strong earnings stream from AWS could lead to significant gains for Amazon’s stock. With Amazon’s net income having climbed 31% in 2025, analysts now project an annual earnings per share growth rate of 21% over the next few years.
Currently, Amazon’s stock trades at 31 times this year’s earnings forecast and 27 times next year’s estimates. While these valuations may appear high, they are deemed reasonable for a company operating at the forefront of the AI-driven cloud boom. Should Amazon maintain a valuation of around 25 times earnings by 2030, the prospect of the stock doubling from its current price seems plausible.
