2 Reasons to Buy Amazon Stock in 2026

Amazon Web Services is reaccelerating into the exponential adoption curve of AI infrastructure. The division's third-quarter revenue of $33 billion marked a robust 20.2% year-over-year expansion, its fastest pace in nearly three years. This growth validates the company's massive infrastructure buildout, as CEO Andy Jassy noted AWS is experiencing demand levels not seen since 2022. More than just a rebound, this reacceleration signals AWS's successful pivot from a traditional cloud provider to the foundational rail for enterprise AI.

The true indicator of long-term visibility and exponential potential is the $200 billion backlog that AWS reached by quarter-end. This is not a short-term order book; it represents multi-year revenue locked in from customers migrating legacy systems and deploying generative AI applications. It provides a durable runway, decoupling near-term growth from quarterly volatility and confirming the durability of demand across both traditional and AI workloads.

To capture more value from this AI stack, AWS is making a historic capital commitment. The company plans to spend approximately $125 billion in 2025, with plans to increase that amount further in 2026. This isn't just about adding servers; it's a strategic build-out of AI-optimized infrastructure. The rollout of custom chips like the Trainium3 UltraServers, powered by a 3-nanometer AI chip, is designed to run ambitious AI training and inference workloads faster and at lower cost.

This vertical integration-building the compute power itself-aims to capture more of the value chain as AI adoption accelerates.

Together, these points form a clear thesis. AWS is reaccelerating into an AI infrastructure S-curve, where growth is no longer linear but exponential. The combination of record growth validating demand, a multi-year backlog ensuring visibility, and a massive capital plan expanding AI-optimized capacity positions the division to capture the next paradigm shift. For investors, this is the infrastructure layer of the future being built today.

Internal Optimization: The Robotics & AI Margin S-Curve

While AWS captures the external AI infrastructure S-curve, Amazon is simultaneously building a parallel curve for internal profitability. The company is leveraging AI and robotics not just to cut costs, but to drive a new, exponential expansion in operating margins. This is a classic vertical integration play: by automating its own operations, Amazon captures more value from its logistics and fulfillment network, directly improving the bottom line.

The scale of this efficiency push is quantified in a specific target. By 2026, analysts estimate automation could save the company nearly $7.5 billion a year by taking over 50,000 manual jobs in fulfillment centers. This isn't a minor cost tweak; it's a fundamental redesign of the operational flywheel. As the company spends heavily on external infrastructure, it is also engineering its internal processes to become more capital-efficient, creating a powerful offset to rising CapEx.

This internal optimization is powered by the same AI stack it sells externally. Amazon is developing its own Trainium3 chips, which are four times faster than older models, and embedding generative AI into core operations. This vertical integration strategy means the company can deploy cutting-edge compute power to solve its own logistical challenges before they become a problem for customers. The result is a virtuous cycle: better AI tools lead to more efficient operations, which generate more cash to fund the next generation of AI infrastructure.

The strategic vision extends beyond its own warehouses. The company is making a massive $50 billion investment to build dedicated AI and high-performance computing (HPC) infrastructure for the U.S. government. This project, set to break ground in 2026, adds nearly 1.3 gigawatts of secure compute capacity. It's a dual-purpose move: it expands AWS's secure cloud footprint into a critical, high-margin government market, while also providing the powerful, specialized hardware needed to train and run the very AI models that will optimize Amazon's internal systems.

The bottom line is that Amazon is engineering a new S-curve for profitability. It's using its AI and robotics investments to drive down the cost of its core operations, directly improving operating margins. This internal efficiency curve, powered by vertical integration and massive capital deployment, runs parallel to the external growth curve of AWS. Together, they form the foundation for the company's ambitious $3 trillion valuation target by 2026.