Amazon is investing in many new AI services that create real value for customers.
It is adding new products to its market and reaching more regions with same-day grocery delivery.
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2025 was an incredible year for the world’s most valuable companies. Nvidia in July became the first $4 trillion stock and has already surpassed $5 trillion Apple and Microsoft recently hit the $4 trillion mark.
Alphabet are the only other stocks worth more than $3 trillion, and Amazon(NASDAQ: AMZN ) isn’t too far behind and currently has a market cap of nearly $2.7 trillion.
Amazon’s stock market has been sluggish for most of the year, but Amazon responded enthusiastically to its third-quarter earnings report, and while it’s still lagging the market this year, it’s finally gaining momentum. At this point, it’s pretty likely that Amazon will join the $3 trillion market cap club next year, which represents only 12% growth.
Here are three reasons why.
Image source: Amazon.
One of the reasons Amazon has languished this year is a slowdown in Amazon Web Services (AWS), while its cloud services rivals are rising higher. Management said it has the largest and most comprehensive range of services for its clients, and indicated that it is still winning in terms of adding dollar amounts, as the percentage growth is much broader than its competitors.
It has also reassured investors that there is much more to come, and it is constantly innovating to gain market share and maintain its edge; AWS controls about 30% of the global cloud services market. This is a big advantage, although its competitors are not far behind.
The market finally felt it in the third quarter, when Amazon reported a 20% year-over-year increase in AWS sales. Here’s how it looked over the past four quarters:
Metric
3rd quarter 25
2nd quarter 25
1st quarter 25
4th quarter 24
AWS sales growth
20%
17.5%
17%
19%
Data source: Amazon quarterly reports.
The acceleration in sales growth, in addition to a broader base, is an impressive feat and means that customers see that it has more to offer than other providers.
AWS is where the business of artificial intelligence (AI) happens. AWS customers can use Amazon’s AI platform to build a wide variety of AI applications at multiple price points and customization options.
Management has provided a number of recent AI updates as they strive to make AI everything to all users. Some of its solutions include SageMaker, a platform for developers to build their own large language model for full customization, as well as Bedrock, a platform that offers developers to use other LLMs like Claude and Nova to build AI applications. The company recently introduced AgentCore, a scalable AI agent development model, Kiro, an agent coding program, and Transform, a porting tool. Management noted that AWS is moving most of the government and large enterprises.
All of these services are used by hundreds of thousands of customers, and Amazon continues to roll out new ones as it gains insight into its customers’ needs.
To meet the incessant demand and reach for more, it expands the available power. Over the past year, it has added 3.8 gigawatts of capacity, including chips and data centers, more than any other cloud company. Until 2027 it plans to double that, including another gigawatt in the coming years.
The AI business is already worth $132 billion. This makes it a good way to improve market sentiment.
Let’s not forget that e-commerce is still Amazon’s main game, accounting for $110 billion in revenue in the third quarter, or nearly two-thirds of the total.
There are two main ways Amazon is improving its value proposition: better product selection and better delivery speed. It added more products from popular brands such as The North Face and Charlotte Tilbury, and had 14% more products in the market than in the third quarter last year.
It currently offers same-day delivery of fresh food to 1,000 locations, with plans to deliver to 2,300 locations by the end of the year. Also, a new button to add items to already scheduled deliveries has just been launched and has already been used 80 million times. These are the kind of updates that build loyalty and increase sales and customer satisfaction.
While these are three important reasons on their own, part of what makes Amazon such a great stock is that it has a variety of businesses, which means it can better manage risk. That’s another reason Amazon stock looks like a buy today.
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Jennifer Saibil has a position at Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft and Nvidia. The Motley Fool recommends the following options: Long 2026 January $395 calls on Microsoft and short 2026 January $405 calls to Microsoft. The Motley Fool has a disclosure policy.
3 reasons to buy this top tech stock that could join Nvidia, Apple, Microsoft and Alphabet in the $3 trillion market cap club next year was originally published by The Motley Fool
