Amazon.com Inc‘s (NASDAQ:AMZN) investment case heading into 2026 is no longer about e-commerce dominance. JPMorgan says the real upside sits in AWS acceleration, AI-led share gains, and a margin story that’s finally beginning to show discipline.
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After years of heavy reinvestment, Amazon is entering a phase where scale, automation, and AI monetization start working together. That shift, JPMorgan argues, is what sets up the stock for the next leg higher.
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Amazon’s AWS Re-Acceleration
JPMorgan expects AWS growth to re-accelerate as enterprise customers ramp AI workloads and resume large-scale migrations. Demand is being driven not just by third-party models, but by Amazon’s expanding AI stack — including Trainium, Bedrock, SageMaker, Nova, and AgentCore — which is helping AWS defend share while improving customer economics.
Importantly, AI is becoming a growth driver rather than a margin drag inside AWS, even if capacity timing creates short-term noise.
AI Beyond The Cloud
Amazon’s AI narrative extends beyond AWS. JPMorgan sees AI improving efficiency across logistics, fulfillment, and advertising, helping lower the cost to serve while lifting engagement across the Prime ecosystem. Automation and robotics are playing a growing role in stabilizing operating costs, especially in North America.
That operational leverage is critical as Amazon balances growth against rising AI-related capex.
Margin Expansion Back In Focus
JPMorgan highlights margin expansion across both North America and international operations, driven by inbound regionalization, inventory placement, same-day delivery infrastructure, and advertising growth. These efficiencies are structural rather than cyclical, supporting a more durable profit profile.
Despite heavy AI investment, JPMorgan sees a meaningful free cash flow inflection in 2026 and 2027. Disciplined spending, improving margins, and higher AWS contribution form the backbone of that thesis.
Retail built Amazon. AI and margin discipline may define its next decade.
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