Amazon (AMZN): Why It's Still a Buy in 2026 Amid AI and Robotics-Driven Margin Expansion

Amazon's stock has faced headwinds in 2025, underperforming broader market benchmarks and peers like Meta and Nvidia despite its aggressive investments in artificial intelligence (AI) and robotics. Critics argue that the company's capital expenditures have strained short-term margins, particularly for Amazon Web Services (AWS), whose operating margin fell to 35% in 2025 from 39.5% previously. However, a closer examination of Amazon's strategic capital allocation and its long-term AI and robotics roadmap reveals a compelling case for why the stock remains a buy in 2026. The company's investments are poised to drive margin recovery, operational efficiency, and competitive differentiation in a rapidly evolving tech landscape.

Strategic Capital Allocation: A Foundation for Long-Term Growth

Amazon's 2025 capital expenditures on AI and robotics totaled approximately $104 billion, with an additional $31.4 billion spent in Q2 alone. These investments are not merely speculative but are strategically aligned with the company's core businesses. For AWS, the focus is on building infrastructure to support advanced AI models and enterprise solutions, which are expected to yield higher-margin services in the long term. On the retail side, the deployment of over 1 million robots across 300 fulfillment centers by 2025 has already generated $12.6 billion in cost savings from 2025 to 2027.

The near-term margin pressures are a temporary trade-off for future scalability. As stated by a report from , Amazon's "Capex Hangover" in 2025-driven by a $125 billion AI infrastructure investment-has set the stage for AWS growth to reaccelerate in 2026, with revenue growth forecasts reaching the high 20s as the industry shifts from AI training to inference. This transition is critical, as inference workloads are expected to dominate the AI market in the coming years, and Amazon's custom silicon, such as Trainium3, is designed to optimize these tasks.

Margin Recovery and ROI Projections for 2026

The financial returns on Amazon's AI and robotics investments are beginning to materialize. By mid-2026, analysts project the company's earnings per share (EPS) to reach $7.86, representing 11% year-over-year growth, with revenue anticipated to hit $790 billion. These figures are underpinned by cost efficiencies from automation, which are expected to save $10 billion annually in operating costs by 2026.

On the logistics front, Amazon's AI control plane-encompassing systems like DeepFleet and Project Eluna-has reduced robot travel time and improved throughput, directly enhancing cost-to-serve metrics in the North America segment. Meanwhile, the expansion of same-day perishable grocery delivery to 2,300 cities is projected to boost order frequency and Prime membership retention, further solidifying Amazon's retail profitability.

Competitive Advantages: Custom Silicon and Energy Infrastructure

Amazon's competitive edge in 2026 lies in its ability to integrate AI and robotics into a cohesive infrastructure that rivals like Meta and Nvidia cannot easily replicate. The launch of Trainium3, for instance, allows developers to reduce AI task costs by up to 40% compared to Nvidia's chips, offering a significant price-performance advantage. This is part of a broader strategy to minimize reliance on external GPUs and optimize cloud profitability.

Moreover, Amazon's $115.9 billion Q3 2025 AI capex and its early moves to secure energy infrastructure-such as long-term power purchase agreements (PPAs) and data center efficiency improvements-position it to outpace competitors in scaling AI workloads. As noted in a report by , the AI infrastructure market is projected to reach a $7 trillion opportunity over the next five years, and Amazon's leadership in cloud computing, robotics, and energy access gives it a multi-dimensional advantage.

Conclusion: A Buy for the Long-Term Investor

While Amazon's 2025 underperformance has raised concerns, the company's strategic investments in AI and robotics are laying the groundwork for a 2026 turnaround. The combination of margin recovery from automation, AWS growth in inference workloads, and a competitive edge in custom silicon and energy infrastructure makes Amazon a compelling buy for investors with a long-term horizon. As the AI era matures, Amazon's ability to integrate these technologies into its core operations will likely cement its position as a leader in both cloud computing and e-commerce.