"Amazon has been a reliable long-term performer, but the growth stock didn't have a spectacular 2025. The growth stock only gained 5% despite strong financial results throughout the year, and this mismatch makes Amazon look promising. It has made great strides in e-commerce, online advertising, cloud computing, and artificial intelligence (AI), four industries that are poised for long-term growth. That's enough to warrant a closer look, and when you dig into recent results, Amazon's stock seems undervalued at current levels."
"That part of the business was up by 24% year over year in Q3, reaching $17.7 billion. Although ad revenue is a little less than 10% of Amazon's total revenue, it is a high-margin business. Amazon is also competing with tech giants Meta Platforms and Alphabet with online ads. Meta Platforms earned $51.2 billion in Q3, while Alphabet brought in $65.9 billion from ads."
"While some AI stocks are speculative, Amazon is already making money with this technology. Amazon Web Services revenue growth has accelerated and achieved a 20% year-over-year growth rate, returning to 2022 growth levels, according to Amazon CEO Andy Jassy. Artificial intelligence requires more cloud computing, and that has resulted in more companies turning to Amazon Web Services. Amazon's cloud platform also lets businesses build AI agents."
Amazon gained only 5% in 2025 despite strong financial performance, creating a valuation mismatch that suggests potential undervaluation. The company advances across e-commerce, online advertising, cloud computing, and artificial intelligence, positioning it for long-term growth. Amazon's advertising revenue grew 24% year over year in Q3 to $17.7 billion and represents under 10% of total revenue but carries high margins. Amazon competes with Meta and Alphabet in ads while its AWS unit returned to 20% year-over-year growth, driven partly by rising AI-related cloud demand. Amazon deploys Trainium2 chips and its cloud platform enables businesses to build AI agents. These trends support margin expansion and future growth.
Read at The Motley Fool
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