Amazon (AMZN +0.64%) enters 2026 in a stronger and more diversified position than it was at the same time last year. While retail continues to define the brand, 2025 showed that the company's economic engine is increasingly driven by cloud computing, advertising, and artificial intelligence (AI).
If 2025 was a year of foundation-building, then 2026 may be the year investors start to see acceleration. Here's what stood out in 2025 and what long-term investors should expect next.
Image source: Getty Images.
What 2025 taught us about Amazon
AWS regained momentum through AI
Amazon Web Services (AWS) cloud computing entered 2025 with questions hanging over its competitive position. But as the year progressed, AWS reasserted itself as Amazon's most important profit engine.
Revenue grew in the mid to high teens throughout the year, supported by rising enterprise demand and accelerating AI workloads. Amazon leaned heavily into its custom silicon strategy -- Trainium and Inferentia -- providing customers with more cost-efficient options for training and inference. Meanwhile, Bedrock made it easier for companies to build generative AI applications using Amazon's own models or those of partners like Anthropic.
Rather than competing for consumer-facing AI attention, AWS focused on powering the back end of AI adoption. This deepened customer stickiness and expanded the long-term opportunity as more companies scale AI deployments.
NASDAQ: AMZN
Key Data Points
Advertising became Amazon's fastest-growing segment
2025 marked a turning point for Amazon's advertising business. Annualized ad revenue exceeded $60 billion, outpacing retail, subscriptions, and even AWS. The driver was simple: Amazon sits at the intersection of shopping intent, first-party data, and media consumption.
Prime Video's shift to an ad-supported tier gave Amazon immediate scale in streaming ads. Fire TV integration helped unify Amazon's connected TV footprint. Across e-commerce, sponsored products have remained one of the highest-converting ad formats in the digital market.
Notably, Amazon's demand-side platform has expanded its partnerships to include Netflix, Roku, and third-party publishers. That allowed Amazon to sell targeted ads beyond its own properties, a quiet but significant step toward becoming a broader adtech player.
Retail slowed but remained strategically essential
Amazon's U.S. e-commerce growth moderated in 2025 as Walmart, Temu, and Shein increased competitive pressure. International markets, such as India and Brazil, grew faster but still delivered thinner margins.
Even so, retail held up well strategically. For instance, North America's e-commerce revenue rose 11% in the third quarter of 2025. International came in stronger at 14% year-over-year growth. Similarly, operating income improved in the first nine months of 2025. In short, retail may not have been the growth engine in 2025, but it continued to deliver solid progress and provide the data that powers AWS and advertising.
What investors should expect in 2026
With the groundwork laid in 2025, 2026 has the potential to demonstrate how these pieces come together.
AWS enters an AI-driven acceleration phase
AI workloads are expected to represent a larger share of AWS's revenue mix by 2026. Training and inference demand remains strong, and more enterprises are shifting mission-critical applications to the cloud.
The key question is margin performance. Amazon's heavy capital expenditures will still weigh on short-term profitability; however, if utilization ramps smoothly, AWS could experience both stable growth and improved operating leverage. For perspective, capital expenditures (capex) surged from $55 billion in the first nine months of 2024 to $92 billion in the same period in 2025. 2026 may be the first year investors get a clearer read on how the AI buildout translates into financial returns.
Advertising becomes a more visible earnings driver
Advertising is expected to remain one of Amazon's most dependable growth levers in 2026. Investors should expect expansion on three fronts, including retail media, connected TV, and off-Amazon adtech -- through Amazon's demand-side platform (DSP). Combined, these drivers should contribute meaningfully to both top-line growth and margin expansion.
Retail becomes more efficient, even with modest growth
Amazon is unlikely to return to double-digit retail growth in 2026, but that may not be a concern. The focus is shifting to efficiency, with more automation in warehouses, faster delivery hubs, and improved personalization through the use of AI.
If Amazon can lift retail margins, even incrementally, and together with an acceptable growth rate, the result -- combined with stronger AWS and advertising contributions -- could materially support overall profitability.
What does it mean for investors?
Amazon enters 2026 with three durable engines: AWS, advertising, and AI. Retail may not drive the headline growth numbers, but it remains the backbone that supports the broader ecosystem. For long-term investors, Amazon remains a business worth following closely -- and, when valuation permits, owning.
