Why Amazon Could Be the Next Big Stock to Watch After Its Rare Losing Streak

Amazon shares have endured nine straight days of decline, marking the longest consecutive sell-off since 2006. Back then, the stock responded with a 128% surge over the following year. While history doesn’t guarantee repeats, Wall Street sees the current price weakness as a significant overdose of pessimism. Not a single analyst recommends selling Amazon stock today, and the consensus price target of $285 per share signals 43% upside potential from current levels around $199. For investors hunting the next big stock opportunity, Amazon’s current valuation and growth trajectory deserve close examination.

The Market’s AI Spending Anxiety

The nine-day losing streak stems largely from one announcement: Amazon plans to invest $200 billion in capital expenditures during 2026, a dramatic 56% jump from the $128 billion spent in 2025. That figure itself surged 64% from $78 billion in 2024. Most of this capital deployment targets artificial intelligence infrastructure development. The announcement triggered investor jitters about near-term profitability, even as CEO Andy Jassy emphasized the company’s confidence in achieving “strong long-term return on invested capital” from AI ventures. This tension between short-term costs and long-term gains typically creates exactly the kind of market panic that can signal contrarian buying opportunities.

Where AI Investment Is Actually Paying Off Today

Despite concerns about future spending, Amazon’s current results show concrete evidence that AI investments drive real business returns. In the fourth quarter, the company posted revenue growth of 14% to $213 billion, with standout performance across core segments:

• Retail e-commerce (first-party): 10% growth
• Retail e-commerce (third-party): 11% growth
• Advertising business: 23% growth
• AWS cloud services: 24% growth

The AWS acceleration represents particularly strong validation. AWS revenue expanded at its fastest pace in 13 consecutive quarters, driven partly by AI infrastructure services and tooling. CFO Brian Olsavsky noted that Amazon’s custom chip business—designed specifically for AI training and inference—hit an annualized revenue run rate exceeding $10 billion, growing at a triple-digit percentage pace. These aren’t theoretical projections; they’re current-quarter realities.

The AI Efficiency Engine Reshaping Operations

Amazon deployed hundreds of generative AI tools throughout its retail operations to optimize inventory placement, warehouse automation, robotic workflows, and last-mile delivery routing. These investments have begun translating directly into margin expansion. Excluding one-time charges that temporarily masked results, Amazon’s operating margin expanded 1.5 percentage points in the quarter alone. For context, that margin improvement occurred while the company simultaneously accelerated capital deployment—proof the AI investments are already functioning as efficiency multipliers rather than pure cost centers.

AWS expanded its AI toolkit across every layer of the technology infrastructure stack: custom processors at the infrastructure level, developer services for building AI applications at the platform layer, and specialized AI agents at the application layer. Jassy told analysts that in 2025 alone, “AWS added more data center capacity than any other company in the world.”

Three Massive Markets Positioning Amazon as a Next Big Stock Opportunity

Market researchers at Grand View Research project the addressable markets Amazon dominates will expand substantially:

• Retail e-commerce: Expected to grow 12% annually through 2030
• Digital advertising: Expected to grow 14% annually through 2030
• Cloud computing: Expected to grow 16% annually through 2033

Amazon holds fortress positions in all three categories. The company’s hybrid advantage—combining consumer-facing e-commerce reach with backend AI infrastructure through AWS—creates a moat competitors struggle to replicate. As these three sectors compound their growth over coming years, Amazon’s exposure to all three simultaneously positions it to capture outsized gains.

Valuation and Earnings Trajectory Support the Bull Case

Wall Street projects Amazon’s earnings will expand at 15% annually through 2027. At the current stock price of $199 per share, this valuation of 28 times forward earnings appears reasonable for a company growing earnings at high-teen percentages while expanding operating margins. For comparison, the broader market typically commands 18-20 times earnings. The nine-day losing streak has gifted patient investors an entry point below historical multiples for a company positioned in accelerating categories.

The median analyst price target of $285 implies significant appreciation potential from current levels. Morgan Stanley and other major research shops have maintained their conviction in Amazon’s ability to monetize AI investments while driving operational efficiencies. The company’s capital allocation—even at the elevated $200 billion 2026 level—reflects management confidence that returns on that invested capital will exceed the company’s cost of capital by meaningful margins.

The Case for Adding Amazon to Your Next Big Stock Portfolio

The question isn’t whether Amazon faces near-term volatility; the question is whether the market has overreacted to announced capital spending plans. History suggests it has. In 2006, when Amazon last experienced a nine-day losing streak, investors panicked about spending and strategy too. The stock subsequently rose 128% in the following year, rewarding those who looked past the short-term headlines.

Today’s environment contains similar ingredients: heavy AI infrastructure investment, margin expansion from efficiency gains, accelerating cloud revenue growth, and market sentiment that has swung too negative. The next big stock opportunity often emerges when the crowd grows most pessimistic about near-term spending while ignoring longer-term competitive positioning. By that measure, Amazon presents a compelling case for investors with time horizons measured in years rather than weeks.