Amazon Stock Divides Investors as AI Bets Soar

Amazon ( (AMZN) ) has been popular among investors this week. Here is a recap of the key news on this stock.

Amazon’s share price has moved sideways over the past year, but the stock remains firmly in Wall Street’s good graces. Analysts maintain a Strong Buy consensus on Amazon, with roughly 46–47 Buy ratings and only a single Hold, and an average 12‑month price target around $294 per share. That implies upside of roughly 23%–27% from recent trading levels near $234, with some high‑profile voices, such as Citi’s Ronald Josey, forecasting even more aggressive gains and calling Amazon their top internet pick. The bullish case rests on accelerating growth at Amazon Web Services (AWS), a strong holiday shopping season that boosted e‑commerce revenue, rapidly expanding advertising sales, and expectations for rising operating margins into 2026.

Under the surface, however, Amazon’s financial picture is more nuanced. Operating cash flow is robust at about $130.7 billion over the past 12 months, helped by roughly 20% growth in AWS and around 24% growth in advertising. Yet massive capital spending—particularly on AI‑driven data centers—has pushed net capex to nearly $116 billion, consuming close to 90% of operating cash flow and cutting free cash flow down to roughly $14.8 billion from about $47.7 billion a year earlier. Management is also in the midst of a major restructuring, with about 14,000 additional corporate job cuts expected, on top of similar layoffs in 2022–2023, as CEO Andy Jassy looks to slim layers of management and lean more on automation and AI tools. While many investors see these investments and cost cuts as building an even wider long‑term moat, some more cautious voices argue that in a richly valued market, Amazon’s premium multiples and thin near‑term free cash flow leave less margin of safety, making the stock more of a hold for now than an outright bargain.