Is Amazon Stock Still a Buy After Reaching All-Time Highs?

Amazon.com (NASDAQ: AMZN) has long been a cornerstone of growth-oriented portfolios, but as its stock price hits record highs in 2025, investors face a critical question: Is it still a compelling buy? The answer lies in dissecting its long-term growth catalysts, valuation dynamics, and risk profile. With AWS posting 20.2% year-over-year revenue growth, a $200 billion backlog, and a booming advertising segment, Amazon's fundamentals remain robust. However, its lofty valuation and competitive pressures demand a nuanced analysis.

AWS: The Engine of Sustained Growth

Amazon Web Services (AWS) continues to outpace expectations, reporting a $33.0 billion revenue for Q3 2025-a 20.2% increase compared to the same period in 2024. This marks the highest growth rate in 11 quarters, driven by surging demand for AI workloads and enterprise cloud solutions. The 200 billion backlog, a metric reflecting unfulfilled long-term contracts, underscores AWS's dominance in the cloud sector and its ability to convert current demand into future revenue.

AWS's competitive edge is further bolstered by Amazon's AI-driven infrastructure. The upcoming launch of Trainium 3, a custom chip optimized for machine learning, is expected to enhance AWS's efficiency and attract clients seeking cutting-edge capabilities. Analysts argue that AWS's 19% growth rate in AI-driven workloads positions it to outperform rivals like Microsoft Azure and Google Cloud, despite intensifying competition.

The Booming Advertising Segment

Amazon's advertising business has emerged as a second pillar of growth, generating $17.6 billion in Q3 2025-a 22% year-over-year increase. This segment benefits from Amazon's unique ecosystem, which allows third-party sellers to leverage data-driven targeting tools and a captive audience of 300 million active users. The expansion of full-funnel advertising offerings, including sponsored products and brand awareness campaigns, has further diversified revenue streams.

Valuation Metrics: Expensive or Justified?

Amazon's valuation remains a point of contention. As of January 2025, it traded at a trailing price-to-earnings (P/E) ratio of 50 and a market cap of $2.5 trillion. While this appears steep, Morningstar raised its fair value estimate to $260 per share, citing AWS's momentum and the potential of Trainium 3. Discrepancies in fair value estimates, ranging from $234.75 (DCF model) to $301.61, highlight the uncertainty in forecasting Amazon's long-term trajectory.

A forward-looking perspective, however, suggests patience may be rewarded. Analysts project a forward P/E of 31.6 and earnings per share of $11.55 by 2028, implying a stock price of $360. This aligns with Wall Street's median price target of $295–$300, which assumes a 30% upside from current levels. For long-term investors, Amazon's ability to reinvest capital into high-growth areas like AI and logistics infrastructure could justify its premium valuation.

Analyst Ratings and Strategic Catalysts

Wall Street analysts remain overwhelmingly bullish. As of November 2025, 45 out of 46 analysts assigned a "Buy" or "Strong Buy" rating, with a median price target of $295–$300. Key drivers include AWS's AI-driven growth, the expansion of Amazon Now (which aims to increase retail order frequency), and the company's dominance in e-commerce advertising.

However, risks persist. Rising capital expenditures, projected to hit $105 billion in 2025, could strain margins if revenue growth slows. Regulatory scrutiny over AI data-center costs and antitrust concerns also loom large. Additionally, competition from Walmart and Costco in e-commerce, and Microsoft in cloud services, could erode market share if Amazon falters in innovation.

Conclusion: A Buy for the Patient Investor

Amazon's stock is undeniably expensive, but its long-term growth drivers-AWS's 20.2% YoY expansion, a $200 billion backlog, and a $17.6 billion advertising segment-justify its premium valuation for investors with a multi-year horizon. While short-term volatility and risks like regulatory pressures or margin compression are valid concerns, the company's ability to reinvent itself through AI and infrastructure investments remains unparalleled.

For strategic buyers, Amazon represents a high-conviction opportunity to capitalize on the digital transformation of global commerce. As one analyst aptly put it: "Amazon's playbook is to dominate markets it enters, and its current trajectory suggests it's far from done."