Amazon (AMZN 1.47%) hasn't been a great investment over the past year. Since 2026 began, its stock has declined by more than 5%.
While it was positive for 2025, the negative price movement started in 2026 after Amazon's poorly received fourth-quarter earnings report. The market sold the stock off by about 10% following earnings, and now the stock is down around 20% from its all-time high of just shy of $260.
If Amazon could hit $260 by the end of 2026, that would indicate a new all-time high for the stock. So, could Amazon return to that level by the end of 2026? Let's find out.
Image source: Getty Images.
Amazon's earnings were fantastic
The 10% sell-off following the announcement didn't have a lot to do with Amazon's actual results. Amazon told investors to expect between $206 billion and $213 billion in revenue for Q4, with operating income coming in around $21 billion to $26 billion. But earnings crushed expectations, with actual revenue coming in at $213.4 billion (up 14% year over year) and operating income of $25 billion.
Within those results were several exciting stories, including Amazon Web Services (AWS), its cloud computing wing, delivering 24% growth -- its best rate in over three years. A huge boost in this area has been Amazon's custom chips designed in-house, which saw revenue climb in the triple digits.
NASDAQ: AMZN
Key Data Points
Amazon is truly doing fantastic, but the issue was its capital expenditure guidance. Amazon told investors to expect $200 billion in capital expenditures for 2026, a massive increase from the $132 billion it spent over the past 12 months. This tanked the stock, but was it warranted?
Amazon has consistently traded in the low-30s forward earnings range, but now it's in the mid-20s.
AMZN PE Ratio (Forward) data by YCharts.
I think this decline shows some skepticism in AI spending, but if growth for AWS continues to accelerate, don't be surprised to see the stock gain all of its losses back and more. The market is in a "show-me" mood right now, and with Amazon spending massive amounts of money, the market wants to see a solid return on investment.
That will take time to pan out, but if Amazon can deliver expectation-beating quarters throughout 2026, I have no doubt that Amazon stock will rise back to its all-time high and break through the $260 level to establish a new high. But if AWS revenue growth starts to falter for some reason, the stock could move in the opposite direction.
