Amazon (AMZN) stock has gained more than 30% over the past three months, recently touching an all-time high of $278.56 in early May. While the stock is trading near record highs, Amazon’s accelerating growth in cloud computing, artificial intelligence (AI), advertising, and custom chips suggests the rally may still have room to run.
AWS and AI Continue to Fuel AMZN’s Growth
The solid momentum is reflected in its recent financial performances. Amazon generated $181.5 billion in revenue in the first quarter, up 17% year-over-year (YOY). A major driver was Amazon Web Services (AWS), which delivered $37.6 billion in revenue with growth accelerating to 28%. Demand for traditional cloud services and AI infrastructure continues to strengthen as companies move more workloads to the cloud.
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Management noted a strong relationship between AI spending and AWS core growth. As businesses invest more heavily in AI, they also consume more computing, storage, and networking services.
AI-related revenue is already growing at a triple-digit pace, and AWS has now reached an annualized revenue run rate of approximately $150 billion. Amazon is rapidly adding data center capacity while simultaneously improving efficiency across its infrastructure footprint to meet surging demand.
www.barchart.com One emerging catalyst is Amazon’s custom silicon business. The company revealed that its chip division grew nearly 40% quarter-over-quarter in the first quarter and now exceeds a $20 billion annual revenue run rate.
The company’s Trainium AI chips are gaining traction as an alternative to GPUs, particularly for AI model training. Amazon disclosed more than $225 billion in revenue commitments tied to Trainium products, supported by multiyear agreements with leading AI companies.
Demand appears exceptionally strong. Trainium2 chips are largely sold out, and Trainium3, which recently began shipping in 2026, is already nearly fully subscribed. Meanwhile, much of the future Trainium4 capacity has reportedly been reserved well ahead of launch.
Advertising and E-Commerce Add More Strength
Beyond cloud and AI, Amazon’s advertising business has become an important profit engine. Advertising revenue reached $17.2 billion during the quarter, growing 22% YOY. The company has also expanded partnerships with major media platforms, which could support further growth in its high-margin ad business.
Meanwhile, Amazon continues improving its core e-commerce operations through faster delivery speeds, robotics, automation, and smarter inventory placement. These operational improvements are helping boost customer satisfaction while increasing efficiency and profitability across Amazon’s massive fulfillment network.
The Risk Investors Should Watch
The biggest near-term concern is Amazon’s aggressive spending. The company continues investing heavily in AI infrastructure, data centers, and semiconductor development. Its capital expenditures were $43.2 billion in Q1. While these investments could generate enormous long-term returns, they are likely to pressure margins and profitability in the near future.
Notably, analysts expect Amazon to report earnings of $7.71 per share in 2026, reflecting a YOY growth of 7.53%. The projected growth rate reflects a steep deceleration in bottom-line growth. AMZN’s EPS increased by about 30% in 2025. Nonetheless, analysts expect a reacceleration in its earnings growth rate in fiscal 2027.
Amazon Stock: Buy, Sell, or Hold?
Amazon is performing well with all of its businesses delivering strong growth. Its dominance in cloud computing, fast-growing AI businesses, including custom chips, and a solid advertising platform position it well to deliver significant growth in the quarters ahead. Also, Amazon’s focus on driving productivity and improving margins augurs well for growth.
While AMZN stock is no longer cheap after its recent run, Amazon’s expanding AI opportunity and multiple high-growth business segments still justify additional upside over the long term.
Thus, for long-term investors, Amazon stock appears to be a “Buy,” even near record highs. Wall Street has a “Strong Buy” recommendation on AMZN stock.
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www.barchart.com On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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