The Magnificent 7 stocks, which have collectively led the markets for the last few years, had a rough first three quarters. Only Apple (AAPL) and Nvidia (NVDA) outperformed the Nasdaq 100 ($IUXX) over the period and were the best-performing Mag 7 shares, in that order.
With a loss of over 21%, Tesla (TSLA) is stuck at the bottom while the remaining four are up in single digits, underperforming the broad-based S&P 500 Index ($SPX). Specifically, Amazon (AMZN) gained nearly 8% in the first nine months of the year. It is, however, down 13% from the 2026 highs it hit in early August following its Q2 2026 earnings release. Let's take a look at AMZN’s Q4 forecast following a sombre performance in the first nine months, which, at least in part, is due to artificial intelligence (AI) agents taking a toll on its business.
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www.barchart.comAmazon Is Underperforming Markets for the Second Consecutive Year
To begin with, this is the second consecutive year when Amazon is underperforming the market. It was the worst-performing Mag 7 stock last year, with gains of around 5%. Over the last five years, it has risen just over 51%, which is less than half of the Nasdaq 100 Index. Among the Mag 7 peers, only Tesla has fared worse. However, the Elon Musk-run company usually tends to move in an orbit of its own and is not a benchmark for other tech stocks in a strict sense.
AMZN Stock Forecast
Sell-side analysts remain upbeat on Amazon, and 53 of the 56 analysts polled by Barchart rate it as a “Buy” or equivalent, while the remaining three rate it as a “Hold.” AMZN stock’s mean target price is $327, while the Street-high price sits at $405.
Recent analyst action has been muted, and there weren’t any significant changes last month. However, on Sept. 30, Rosenblatt Securities analyst Scott Devitt raised Amazon’s target price from $335 to $365, which is 46% higher than current prices. Importantly, Devitt said that fears of AI agents being a threat to Amazon are overblown and believes the company’s core e-commerce business would be a net beneficiary of agentic commerce.
www.barchart.comAgentic AI Is Threatening Amazon’s Digital Ad Business
To be sure, fears over AI agents disrupting Amazon’s business are real. It threatens the company’s fast-growing and highly lucrative digital ad business, where sellers pay to have their product featured. If agentic commerce explodes the way many are predicting, it would hit Amazon’s ad business, whose revenues rose 22% to over $68 billion last year. There are also concerns over agents bypassing Amazon to make purchases on other platforms.
So far, Amazon’s response has been to firewall its platform from third-party AI agents. Last year, it blocked Perplexity’s Comet AI browser from scraping its website and sued the company. The Andy Jassy-led company received a temporary injunction, but in August the San Francisco-based 9th U.S. Circuit Court of Appeals overturned that decision.
Now, Amazon has blocked Meta Platforms’ (META) Muse AI agent from its e-commerce site. While Amazon has been trying to block third-party AI agents from accessing its platform, I believe the company will eventually need to give in amid the legal tussles.
How to Play Amazon Stock?
While agentic AI could hurt Amazon’s digital ad business, AI is helping other aspects of the company's business, particularly the enterprise-focused Amazon Web Services (AWS), whose revenues grew 37% in Q2, the fastest growth in 18 quarters. Amazon’s custom AI chip business is also growing at a brisk pace due to AI. In an update in April, Jassy said the business is running at an annual revenue run rate in excess of $20 billion and “growing triple-digit percentages.” He added that Amazon is currently monetizing its chips through Elastic Compute Cloud (EC2), and if its chip business were standalone, it could have sold chips worth $50 billion to AWS and third-party customers. As ironic as it might sound, while Amazon has blocked Muse, in April Meta partnered with the e-commerce giant for its Graviton chips to power agentic AI.
I believe that while AI is a headwind to Amazon’s digital ad business, the technology would be a net positive for the company given the benefits to other segments. The stock's underperformance over the last year is an opportunity to add more shares given the reasonable valuations.
On the date of publication, Mohit Oberoi had a position in: AMZN , META , NVDA , TSLA . 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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