Amazon (AMZN 0.58%) has been a wonderful investment. In the past decade, shares of the customer-obsessed business have climbed 632% (as of Feb. 23). Despite the monster long-term gain, they're trading 19% off their peak as volatility has increased.
Is it time to buy the dip on Amazon in 2026? Here's what investors need to know about this "Magnificent Seven" stock.
Image source: Amazon.
Pushing the business forward
Anyone who has even a remote familiarity with this business knows that Amazon Web Service (AWS) has quickly become a dominant force in the world of cloud computing. It collected $129 billion in revenue last year, putting it well ahead of peers. And it generated $46 billion in operating income, representing 66% of Amazon's total.
If these financial figures aren't exciting enough, AWS' strategic positioning should drive investor enthusiasm. Besides the general cloud computing tailwind of company IT workloads moving off-site, this segment is thriving lately because of the strong interest from customers wanting to use artificial intelligence (AI) tools and applications.
"The biggest reason that AWS continues to gain AI share is our uniquely broad top-to-bottom AI stack functionality," CEO Andy Jassy said on the fourth quarter 2025 earnings call. "In AI, we are doing what we've always done in AWS, solving customer challenges."
Retail shouldn't be overlooked
Amazon made a name for itself by disrupting the retail sector with its massive selection, low prices, fast and cheap delivery, and exceptional customer experience. It continues to dominate. Revenue from online and physical stores grew more than 9% year over year to $88.9 billion in Q4 (ended Dec. 31, 2025). And the North America segment posted a 9% operating margin in the quarter, up from 8% in the year-ago period.
Management remains focused on further penetrating the grocery vertical. Through online channels and Whole Foods, Amazon sold more than $150 billion worth of groceries last year alone. And it plans to "open more than 100 new Whole Foods Market stores over the next few years," Jassy said.
NASDAQ: AMZN
Key Data Points
Investors might be surprised by the valuation
Amazon is clearly a gargantuan enterprise, with $717 billion in 2025 net sales and a market cap of $2.2 trillion. The business doesn't fly under the radar. So, investors might be surprised to realize that the valuation isn't expensive. In fact, it's attractive right now.
Shares can be bought at a price-to-earnings ratio of 28.3. This is about as cheap as the stock has gotten in the past 10 years. If you're interested in Amazon, today is a great time to buy.
