Is Amazon Stock Still a Buy in 2025?

The question of whether Amazon remains a compelling investment in 2025 hinges on reconciling its five-year underperformance against the S&P 500 with the robust growth of its core businesses and the transformative potential of artificial intelligence (AI). While Amazon's stock has lagged the broader market over the past five years, delivering a total return of 43–44% compared to the S&P 500's 86% according to a 2025 analysis, recent developments in its cloud computing division and e-commerce operations suggest a nuanced picture. This analysis examines the interplay of these factors to assess whether the stock's current valuation offers a compelling entry point for long-term investors.

A Tale of Two Periods: Underperformance and Resilience

Amazon's five-year underperformance is stark. A $100 investment in the stock in 2020 would have grown to $143 by November 2025, while the same amount in the S&P 500 would have reached $200 according to Yahoo Finance. This gap reflects a period of volatility, with much of Amazon's gains concentrated in 2023 and 2024 according to market data. However, the company's long-term fundamentals remain intact. Its e-commerce business, which generated $486.6 billion in revenue in 2025, continues to benefit from a 15.9% compound annual growth rate (CAGR) since 2020 according to industry reports. Meanwhile, Amazon Web Services (AWS), its most profitable division, reported 20% year-over-year revenue growth in Q3 2025, driven by surging demand for AI infrastructure according to market analysis.

AWS: The Engine of Future Growth

AWS's recent acceleration is a critical factor. The division, which contributed $33.0 billion in revenue during Q3 2025, now commands a 29% global market share in cloud infrastructure, outpacing Microsoft's Azure (20%) and Google Cloud (13%) according to Statista data. This dominance is being further solidified by strategic AI partnerships. The $38 billion multi-year deal with OpenAI, for instance, grants the AI firm access to hundreds of thousands of NVIDIA GPUs and AWS's custom silicon, such as the Trainium2 chips according to company announcements. This partnership not only secures AWS's position as a leader in AI infrastructure but also sets a precedent for long-term, high-value contracts in the hyperscaler space according to industry analysis.

The implications of such alliances are profound. OpenAI's shift from exclusive reliance on Microsoft to a diversified infrastructure strategy underscores AWS's ability to meet the massive compute demands of next-generation AI models according to Reuters reporting. Moreover, AWS's investment in large-scale AI compute clusters, like Project Rainier, positions it to capitalize on the broader AI boom, which is already driving global cloud infrastructure spending to $107 billion in Q3 2025 according to research findings. With the cloud computing industry projected to grow at a 20% CAGR through 2030 according to market forecasts, AWS's current trajectory suggests it is well-placed to outperform in the coming years.

E-Commerce Tailwinds and Valuation Considerations

Amazon's e-commerce dominance remains a long-term tailwind. The company controls 40.4% of U.S. retail e-commerce sales in 2025 according to market research, a position reinforced by its 38% market share in the broader U.S. e-commerce sector according to industry statistics. This entrenched position, combined with the scalability of its logistics network, provides a durable competitive advantage. However, the question of valuation is more complex. Amazon's current price-to-earnings (P/E) ratio of 32.45 is below its 12-month average of 38 according to financial data, suggesting it trades closer to intrinsic value. A discounted cash flow (DCF) model estimates its intrinsic value at $272.24 per share, implying a 10.3% discount to current prices according to financial modeling.

While this appears attractive, differing narratives complicate the assessment. A bullish case projects a fair value of $287.57, indicating undervaluation by 13.6%, whereas a bearish case estimates $222.55, suggesting overvaluation by 11.6% according to market analysis. These divergences reflect uncertainty about the pace of AI-driven growth, regulatory risks, and competitive pressures in both e-commerce and cloud computing.

Conclusion: A Calculated Bet on the Future

Amazon's five-year underperformance against the S&P 500 is undeniable, but it obscures the company's underlying strengths. AWS's reacceleration, bolstered by AI partnerships, and the enduring power of its e-commerce platform present a compelling case for long-term growth. The stock's valuation, while not dramatically cheap, appears to offer a margin of safety for investors willing to bet on these tailwinds. However, the risks-ranging from regulatory scrutiny to the rapid pace of technological disruption-cannot be ignored. For those with a multi-year horizon and a tolerance for volatility, Amazon remains a buy, but one that demands careful monitoring of its evolving ecosystem.