Amazon Stock (AMZN) Investors Must Watch These Catalysts and Risks

Amazon's stock performance is influenced by its dominance in e-commerce, cloud computing, and advertising. Catalysts include AWS revenue growth and increasing demand for AWS' new generative AI tools. Risks include the impact of a slowing economy on retail and advertising revenue, and intense competition in cloud computing from Microsoft and Google.

Title: Amazon's Stock Performance: E-commerce, Cloud, and Advertising

Amazon's stock performance has been a subject of interest for investors, driven by its dominance in e-commerce, cloud computing, and advertising. The company's recent earnings reports and market performance highlight both the potential for growth and the risks that investors should be aware of.

E-commerce Slowdown and Advertising Growth

One of the key factors influencing Amazon's stock performance is the slowing growth of its e-commerce business. According to the latest financial reports [1], Amazon's core commerce revenue grew at around 5% to 6% in the second quarter of 2025, a significant decrease from the breakneck growth rates of the 2010s. This slowdown is reflected in its North America and international sales growth, which rose by just 8% and 5% year over year, respectively. Despite the challenges, Amazon is making efforts to improve its logistics network and expand its low-cost e-commerce platform, Amazon Haul, to compete with newer entrants like Temu and Shein.

On the positive side, Amazon's advertising business is quietly gaining momentum. Ad revenue jumped 18% year over year in the first quarter of 2025, making it one of the largest digital advertising platforms globally. The high margins in this business segment present a significant opportunity for Amazon to contribute more to its bottom line. The company's unique advantage lies in its ability to reach customers at the moment they are ready to buy, leading to higher conversion rates. Additionally, Amazon's Prime Video ad revenue has opened up a new chapter, with the platform now being one of the largest ad-supported streaming services globally [1].

Cloud Computing and AI

Another significant driver of Amazon's stock performance is its cloud computing division, AWS. AWS has been a major contributor to Amazon's revenue growth, with analysts expecting continued strong performance. The introduction of new generative AI tools by AWS is also seen as a catalyst for growth, as the demand for AI services is increasing. Amazon's push into AI, including the deployment of its 1 millionth robot and the launch of its new AI foundation model, positions the company to leverage AI for operational efficiencies and cost savings [2].

Risks and Competition

While Amazon's stock performance has been positive, there are several risks to consider. The slowing economy could impact both retail and advertising revenue, leading to potential headwinds for the company's financial performance. Additionally, intense competition in the cloud computing market from companies like Microsoft and Google poses a challenge to AWS's market share. Amazon's ability to maintain its competitive edge in these areas will be crucial for its long-term success.

Investment Outlook

For long-term investors, understanding which parts of Amazon's business are growing and which are not is key to evaluating the company's future prospects. While the e-commerce segment faces challenges, the high-margin advertising business and the strong performance of AWS provide opportunities for growth. However, investors should also be mindful of the risks associated with a slowing economy and intense competition.

References

[1] https://www.nasdaq.com/articles/thinking-buying-amazon-stock-heres-1-green-flag-and-1-red-flag
[2] https://247wallst.com/investing/2025/08/11/amazon-stock-price-prediction-where-will-it-be-in-1-year/