Amazon (NASDAQ:AMZN) stock is barely flinching today, trading almost flat, even after a Reuters report said the company is preparing another round of corporate layoffs.
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According to people familiar with the matter, Amazon could cut about the same number of jobs as it did in October – around 14,000 – as part of a broader plan to trim about 30,000 white-collar roles. The reductions are expected to hit AWS, retail, Prime Video, and HR, with notifications potentially starting as soon as next week.
Yet, investors appear to be taking the news in stride. Part of the reason may be management’s framing of the cuts. CEO Andy Jassy previously emphasized that the effort is more about culture and reducing bureaucracy than purely saving money. He argues that Amazon needs to operate leaner as AI improves productivity across the company.
With the layoff noise in the background, attention is already shifting to what comes next – Amazon’s fourth-quarter earnings report, due on February 5. That’s where Wall Street will look for confirmation that AWS, the company’s profit engine, is finding its footing again after a period of slower growth.
Among the optimists is Baird analyst Colin Sebastian, who argues that AWS is entering 2026 on “stronger competitive footing,” with several positive shifts ahead as new capacity and AI infrastructure come online. The analyst expects AI-related revenue to rise gradually as capacity unlocks, with AWS growth trending back toward the low-to-mid-20% range over time.
Sebastian also highlighted progress across Amazon’s AI stack, noting that the building blocks are now in place for AWS to compete more effectively for AI workloads. The analyst pointed to customer adoption moving from experimentation into production and said that higher utilization of Amazon’s custom chips in new AI clusters should translate into structural benefits for both growth and margins.
Importantly, Sebastian downplayed concerns about near-term lumpiness in performance, suggesting investors should focus on the bigger picture. While growth may not be perfectly linear quarter to quarter, the analyst prefers a gradual ramp in AI-driven revenue as capacity expands, even if that means some short-term noise in margins due to heavy investment.
Sebastian also sees strategic value in Amazon’s push into custom silicon, which should reduce reliance on third-party chips over time and support longer-term profitability. Beyond hardware, Sebastian highlighted advantages from Amazon’s broader ecosystem – from tighter links between AWS and the retail business to expanding AI services and application layers.
In short, while layoffs may dominate today’s headlines, the market seems more focused on what Amazon will say next week about AWS momentum and AI demand. If Sebastian’s view is right, the current calm could reflect growing confidence that Amazon’s long-term growth story remains intact.
The broader analyst community largely shares Sebastian’s bullish stance. According to TipRanks, Amazon currently carries a Strong Buy consensus rating based on 47 analyst reviews, with 46 Buys and just 1 Hold. The Street’s average 12-month price target stands at $295.05, implying ~23% upside from current levels. Bullish forecasts stretch as high as $340, while even the most cautious target of $230 still sits near today’s price. (See AMZN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.