Shares of Amazon (AMZN +0.27%) underperformed in 2025, posting a total return of 5.2% compared to a 17.9% return for the S&P 500 index. However, one reason this underperformance is unlikely to persist in 2026 is the growth in Amazon's cloud computing business.
Image source: Getty Images.
Why buy Amazon stock
Growth for Amazon Web Services (AWS) grew 17% year over year in the first half of 2025. However, growth accelerated to 20% year over year in the third quarter.
NASDAQ: AMZN
Key Data Points
AWS remains the cloud leader, but its revenue growth has been capped by a lack of sufficient compute capacity to meet demand. This limited the segment's growth in 2025; however, Amazon plans to double its capacity by the end of 2027, which could lead to higher top-line growth.
Amazon could be well-positioned to meet the growing demand for agentic AI with Amazon Bedrock, which management expects to become a larger revenue driver for its cloud business over the long term.
Because AWS is Amazon's most significant profit driver, growth from this segment is a major catalyst for the stock. This is while the stock is trading at its lowest multiple of operating cash flow in over 10 years, setting the stage for outperformance over the S&P 500 in 2026.
