Amazon Stock Is Near Record Highs. Why There’s Still Room for AMZN to Grow.

Amazon.com (AMZN) stock has delivered relatively modest returns so far in 2026. However, AMZN stock recently climbed to a new all-time high after the company reported its second-quarter financial results. Although the stock has since retreated somewhat from that peak, several factors indicate that Amazon still has room for further gains.

AMZN’s major business segments continue to grow at a solid pace. Amazon Web Services (AWS) is accelerating, while Amazon’s investments in AI chips and related technologies could provide another significant long-term growth opportunity. At the same time, its strong operating performance has helped ease investor concerns surrounding the substantial capital spending required to build out its artificial intelligence (AI) infrastructure.

Although Amazon stock is trading near record levels, solid momentum across its businesses could support additional gains.

AWS to Sustain Solid Growth

Amazon’s AWS continues to deliver solid growth, and the momentum will likely sustain in the quarters ahead. Revenue from the cloud segment reached $42.2 billion in Q2, an increase of 36.7% year-over-year (YOY). Management highlighted that the growth accelerated for the fifth consecutive quarter, with AWS adding more than $4.6 billion in revenue compared with the previous quarter. Its backlog has also expanded significantly, reaching $496 billion and growing at a triple-digit rate YOY.

AWS has now reached an annualized revenue run rate of approximately $169 billion. Customers are continuing to migrate workloads to the cloud and expand their reliance on AWS's core services. And, the growing adoption of AI is encouraging businesses to accelerate their cloud transition, pointing to strong growth ahead.

Notably, as customers increase spending on AI, they are also consuming more traditional cloud infrastructure and services. This creates additional demand for AWS's core offerings.

AWS segment generated $16.6 billion in operating income, reflecting both the segment's rapid expansion and Amazon's ongoing efforts to improve operational efficiency.

AI and Custom Chips Support AMZN’s Bull Case

Amazon's custom chip business has become a meaningful contributor to its financials, with its annualized revenue run rate now exceeding $25 billion and expanding at triple-digit rates YOY. Meanwhile, the company's AI-related revenue run rate has risen substantially from the previous quarter and has also surpassed $25 billion, with triple-digit YOY growth.

AI adoption and post-training reinforcement learning and agent-based tools are also driving demand for CPll. This creates an opportunity for AWS's Graviton processors. Most of its top customers already use Graviton processors. Revenue commitments for the platform nearly tripled quarter over quarter, while Graviton5 is seeing strong growth.

Amazon’s Advertising Revenue Continues to Expand

Amazon's advertising business is another important source of growth. Advertising revenue reached $19.8 billion in Q2, representing a 26% YOY increase.

Sponsored Products remains Amazon's largest advertising format and continues to contribute significantly to growth. At the same time, consumers are increasingly finding products through Amazon's conversational and agent-driven experiences, including Alexa+ and Alexa for Shopping.

Also, Amazon is seeing continued engagement with advertising on Prime Video and during live sporting events, creating additional opportunities for the advertising business.

E-Commerce Growth and Automation Could Improve Efficiency

Amazon's core e-commerce operation is continuing to expand, supported by its broad product selection and increasingly fast delivery network. At the same time, the company is working to make its fulfillment operations more efficient.

Amazon is optimizing where inventory is stored, reducing the distances packages travel, minimizing the number of handling steps required for each shipment, and improving package consolidation. These initiatives are helping the company manage fulfillment costs while maintaining its delivery advantage.

Robotics and automation are becoming increasingly important across Amazon's fulfillment network. Amazon expects to more than double its fleet of robotic arms, which could further improve productivity and operational efficiency as its e-commerce business scales.

Analysts Remain Optimistic About AMZN Stock

Amazon continues to deliver strong growth across its business. AWS is maintaining solid momentum, while the company is expanding its AI and chip operations. At the same time, Amazon’s high-margin advertising segment remains a significant source of strength, and its e-commerce business continues to grow steadily. These factors have kept analysts bullish on Amazon stock.

Analysts have a “Strong Buy” consensus rating on AMZN stock. The average price target of $327.20 suggests 27.1% potential upside from the stock’s current level.

The Bottom Line

While Amazon stock is trading near a record high, accelerating AWS growth, expanding AI and custom-chip opportunities, rising advertising revenue, and improving e-commerce efficiency provide multiple engines for future earnings growth. While valuation and elevated AI-related capital spending remain key risks, Amazon’s solid growth fundamentals indicate further upside as it continues to convert its investments into higher revenue and profitability.