Key Points
Amazon stock is beating the market with a 17% increase so far in 2026.
AWS has become the big driver for the company, accounting for more than half of its operating profit.
With net margins breaking through the 10% ceiling for the first time last year, Amazon is worth today’s upticks and potentially more.
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Bang a gong, Amazon (NASDAQ: AMZN). Shares of the leading online retailer — recently crowned the largest U.S.-listed company by trailing revenue — are rolling again. The stock hit another all-time this week, more than bouncing back from a short-lived sell-off earlier this year.
With the shares up a market-thumping 44% this year, you may be wondering if it’s too late. If you’re looking to put $50,000 to work in your portfolio, would you be better served finding a smaller company or one that is currently out of favor as a turnaround play? You may not want to make the same mistake that others did by skirting Amazon stock the last few times it notched all-time highs. Let’s dive into why the iconic growth stock could still deliver generational wealth for new investors.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
Spending money to make money
It’s been three months since Amazon rattled the market by announcing that capital expenditures this year would catapult to $200 billion, more than doubling what it spent two years ago. Investors weren’t pleased with the spending spree for a company that most flock to as a shopping destination. However, last month’s first-quarter results validated its more free-spending ways.
It’s not just that year-over-year net sales rose 17% through the first three months of the year, its strongest jump in nearly five years. It’s the ongoing ascent for Amazon Web Services (AWS), its market-leading cloud hosting business, that continues to be its biggest growth driver.
You can’t spell “awesome” without “AWS”
Segment sales for AWS rose 28% to $37.6 million, up to 21% of Amazon’s overall top-line results for the quarter. Despite accounting for a little more than Amazon’s net sales, its $14.2 billion in segment operating profit accounted for more than half of the e-commerce giant’s $23.9 in operating profit in the first quarter.
With its North American e-commerce business growing at a 12% clip in the first quarter, AWS is doing a lot of the heavy lifting. It’s also the catalyst for Amazon digging deeper into its pockets. It’s already paying off.
Amazon has recently announced that Instagram and Facebook parent Meta Platforms will be leaning on Amazon’s homegrown Graviton chips to fuel its agentic artificial intelligence (AI) efforts. Yes, Amazon is selling AI chips now. Rising AI platform Anthropic — where Amazon has been an early investor at attractive price points — has committed to spend more than $100 billion on AWS over the next decade.
Amazon stock isn’t necessarily cheap. It’s trading for 32 times forward earnings and a still rich 27 times next year’s profit target. The good news is that its high-margin AWS business is boosting Amazon’s net margins. Amazon isn’t just growing faster than it has since the spring of 2021. Its trailing net margin of 12.2% is the highest it has ever been. Amazon has never deserved a market premium the way it does right now. If that trend can continue, your next $50,000 investment in Amazon — or whatever you’re comfortable in deploying — could be just fine.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $548,603!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $54,734!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $475,926!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of May 8, 2026.
Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Meta Platforms. The Motley Fool has a disclosure policy.
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