Key Points
Amazon (NASDAQ: AMZN)the world’s largest e-commerce and cloud infrastructure company, will post its second-quarter earnings report on July 30. Analysts expect its revenue and EPS to rise 17% and 8%, respectively, year over year.
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What are the catalysts and challenges for Amazon’s stock?
Amazon generates most of its revenue from its e-commerce business, but most of its profits come from Amazon Web Services (AWS), the world’s largest cloud infrastructure platform. AWS controlled nearly a third of the cloud platform market last year, according to Canalys.
Its e-commerce business faces inflationary and competitive headwinds. Still, it’s addressing those challenges by regionalizing its fulfillment network, automating its warehouses, adjusting its third-party seller fees, selling more everyday essentials, and launching low-cost storefronts.
AWS is growing rapidly as more companies expand their cloud infrastructure to handle the latest AI applications. It hosts Bedrock, a platform that helps companies access multiple AI models, develops agentic AI tools, and produces custom AI chips. But to support that expansion, Amazon will boost its capex from $131.8 billion in 2025 to $200 billion in 2026, even as it prunes its workforce. That near-term pressure on margins makes its top-line growth less impressive.
However, Amazon is also expanding its higher-margin advertising business — which sells integrated ads and promoted listings across its marketplace — to offset that pressure. That business could eventually become a secondary profit engine alongside AWS.
Is Amazon’s stock worth buying today?
Amazon’s stock has stayed flat this year because investors are concerned about the macro headwinds for its e-commerce business and its increased cloud and AI spending. But at the same time, its e-commerce and cloud businesses remain well-positioned to grow over the long term. That tug-of-war between the bulls and bears could continue through the rest of the year.
For 2026, analysts expect Amazon’s revenue and EPS to grow 15% and 22%, respectively. Its stock still looks reasonably valued at 27 times forward earnings. So if you still believe in its long-term growth potential, it’s safe to buy the stock as most investors fret over its near-term challenges. That said, any upward revisions to its full-year capex or warnings about the macro environment in its upcoming earnings report might cause its stock to drop, so it might be prudent to wait for the market’s broader reaction before buying more shares.
