Amazon has become a major outsider in Big Tech in 2025. Is it worth buying its stock?

Amazon's stock has been the worst performer in 2025 as part of the "Magnificent Seven", displacing Apple as the outsider. Since the beginning of the year, the securities have added less than 1% amid growing investor doubts about the prospects of the cloud business Amazon Web Services. Additional pressure is created by the company's lack of a clear strategy in the field of artificial intelligence. AWS still remains the market share leader, but its gap from Microsoft Azure and Google Cloud is rapidly shrinking. Against this background, expectations from Amazon's report for the third quarter are growing - investors are waiting for the acceleration of growth in the cloud business.

Amazon shares fell more than 3% on September 23, leveling out almost all of the growth since the beginning of the year. The return on the retailer's securities this year amounted to only 0.6% - this is the worst result in the "Magnificent Seven". Previously, this status belonged to Apple, but thanks to growing investor confidence amid strong iPhone sales, Apple's securities went into the plus side and overtook Amazon, MarketWatch notes.

Amazon's weak dynamics is not only characteristic of 2025. Over the past five years, the company's stock has risen just 43%, while the S&P 500 index has added 102%. On an annualized basis, that equates to a 7.4% increase for Amazon and a 15.1% increase for the S&P 500, according to Dow Jones Market Data cited by the publication.

Investors are expressing frustration that Amazon isn't offering a clear roadmap for artificial intelligence, Mizuho analyst Jordan Klein told MarketWatch.

In the second quarter, AWS's cloud division reported revenue growth of 17.5%, which just matched but did not exceed investor expectations. By comparison, Microsoft's cloud business grew 39% and Alphabet's grew 32% for the quarter ending July 2025. Both results beat analysts' forecasts.

In addition to the weak numbers, Amazon CEO Andy Jesse gave no specific guidance on AWS' prospects at the company's most recent quarter-end conference call, leaving investors in the dark, MarketWatch writes. Among the main constraints to AWS growth are problems with access to power, "outages with chips as well as certain components to build servers," Jesse said.

AWS remains the largest cloud provider by market share, followed by Microsoft's Azure and Google Cloud. However, AWS' dominance is increasingly being challenged, especially by Azure, according to Richard Windsor, founder of research firm Radio Free Mobile.

"There were times when AWS was many times the size of Azure, but those days are gone. It can't be ruled out that if Amazon continues to tank and Azure continues to grow faster, at some point Microsoft will overtake Amazon," Windsor said.

Amazon's third-quarter report will be a chance to change the market's perception of the company. According to analyst Mizuho, an acceleration of AWS growth to around 20% would be an important signal to reduce investor anxiety. However, there may not be definitive clarity: it could take "several quarters" to resolve the issues, according to Jesse.

Last week, Truist Securities maintained a "buy" recommendation on Amazon stock and raised its target price from $250 to $270. His estimate implies a 22.3% upside for the stock.

Amazon, according to FactSet data cited by MarketScreener, has an average rating of "buy" and an average price target of $263 on the stock. That implies a 19.2% upside for the stock.

This article was AI-translated and verified by a human editor