Technology stocks have skyrocketed in recent years, and the momentum has continued in 2025. This is as investors piled into companies present in the hot area of artificial intelligence (AI). Amazon (AMZN 0.41%), a company operating in the consumer goods and tech sectors, has benefited from this momentum, climbing in the double digits over the past three years, but performance this year has been lackluster -- at the moment, the stock is down about 1% year to date.
The reason? Investors have worried about the impact of President Donald Trump's import tariffs on the company's e-commerce business -- and Amazon also has suffered at certain points this year amid general concern about the valuations of technology stocks. If the industry as a whole looks expensive, investors may avoid it. So, now it's reasonable to ask whether these headwinds will continue, or whether Amazon might soon explode higher. Where will Amazon stock be in a year? Let's find out.
Image source: Amazon.
Amazon's moat
First, let's take a step back to consider the Amazon story of the past few years. As you probably know, the company owns the global e-commerce giant Amazon.com, and this business generates billions of dollars in revenue year after year. Amazon has kept customers coming back thanks to its fantastic subscription service, Prime, which offers members everything from fast and free shipping to content like books and movies. This, along with Amazon's extensive fulfillment and delivery network, represent a solid moat -- a competitive advantage that should keep it ahead of rivals.
Though Amazon's e-commerce business suffered in the high interest rate environment a few years ago, the company at that point made a key move that should set it up for long-term success. It revamped its cost structure, and at the same time, the company leaned more heavily into using AI to help it improve efficiency. We've already seen the results of this, as Amazon has returned to growth -- after a loss in 2022 --and the efforts are lowering the company's cost to serve. As this continues, Amazon should progressively make gains in profitability.
NASDAQ: AMZN
Key Data Points
Meanwhile, Amazon Web Services (AWS), the company's cloud computing business and biggest profit engine, has established itself as a major player in the AI space. AWS offers customers everything they may need for their AI projects, from top Nvidia chips and budget-friendly chips designed by AWS itself to access to large language models (LLMs). As the world's biggest cloud services provider, it's well positioned to win customers for its AI offerings -- and we can see these results already, with AWS achieving a $123 billion annual revenue run rate in the recent quarter.
What's ahead for Amazon?
Still, these positive points haven't been enough to supercharge the stock this year. So, where do I think Amazon will be a year from now? As mentioned, investors have worried about the impact of U.S. import tariffs on earnings. Amazon has said that in the first half of the year it didn't see lower demand or significantly higher prices on items -- and the company said that, moving forward, its broad range of sellers means a customer probably will find the best prices on Amazon.
If Amazon's upcoming earnings reports show sustained growth in revenue, supporting this idea of limited tariff impact, investors may reconsider Amazon stock -- especially since, today, trading for 32x forward earnings estimates, down from 50x less than two years ago, it looks very reasonably priced.
At the same time, capacity for AI workloads is in high demand, and this should continue to fuel revenue growth at AWS. As mentioned above, Amazon's earnings also are likely to benefit from the cost structure improvements and use of AI to gain in efficiency.
Of course, it's impossible to predict share price performance over the coming year, but it's fair to say that Amazon has what it takes to advance and potentially outperform other technology companies that have seen their shares surge this year. Investors might be looking to lock in profits in some cases and rotate into a quality company that hasn't yet seen its shares skyrocket -- and that could make this consumer and tech player a winner a year from now.
