AWS Is Growing at Its Fastest Rate in 18 Quarters. Is Amazon Stock Still a Buy at $255?

Key Stats for Amazon.com, Inc.

• 52-Week Range: $196.00 to $287.20
• Street Target Price: $329.20
• Market Cap: $2.79T
• LTM Gross Margin: 50.8%
• LTM EBIT Margin: 12.1%
• Fwd 2-Yr Revenue CAGR: ~15%
• Fwd 2-Yr EPS CAGR: ~20%

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AWS Is Reaccelerating, and the Market Is Paying Close Attention

Amazon (AMZN) came into 2026 with momentum across all three of its major businesses, retail, cloud, and advertising, but the cloud side is what has been driving the conversation on the Street. AWS, Amazon Web Services, is the division that rents computing power, storage, and AI infrastructure to businesses of every size.

It is, in practical terms, the backbone that lets companies run their software and store their data without having to build and maintain their own data centers, and it has become one of the most profitable businesses in the world.

AWS net sales grew 37% year over year in Q2 2026 to $42.2 billion, the fastest growth rate the division has posted in 18 quarters. CEO Andy Jassy pointed directly to AI and cloud demand as the drivers, noting that AWS has grown 36% or faster in back-to-back quarters and that customer demand is not showing signs of letting up.

The broader Q2 picture backed that up: total net sales rose 20% to $200.6 billion, operating income climbed 43% to $27.5 billion, and the advertising business continued its own rapid expansion.

The revenue chart puts the scale in perspective. From $470B in 2021, Amazon has grown steadily toward $717B in 2025, with consensus estimates carrying the business toward $828B this year and approaching $1.4T by 2030.

Sustaining around 15% annual revenue growth at that size is genuinely hard to do, and the AWS reacceleration is the primary reason the market believes the trajectory holds.

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The Margin Story Matters as Much as the Revenue

A lot of investors still think of Amazon primarily as a retailer, and that mental model leads them to underestimate how different the business actually is today. The retail side, both domestic and international, still runs at thinner margins because Amazon prices competitively and spends heavily on logistics.

But AWS runs at significantly higher margins, and the advertising business, tucked inside the North America segment, is one of the highest-margin operations in the entire company. As both grow faster than the retail core, the blended margin profile keeps expanding.

The operating income chart shows exactly how dramatic that shift has been. Operating income fell from $24.9B in 2021 to $13.3B in 2022 when Amazon absorbed the cost of doubling its logistics capacity during the pandemic surge and then watched consumer spending normalize.

The recovery since has been steep in a way that surprised even most optimists: $36.9B in 2023, $68.6B in 2024, $80.0B in 2025. A single quarter in Q2 2026 produced $27.5B in operating income, up 43% year over year, which puts the full-year 2026 figure on track to move well past 2025.

North America segment operating income hit $9.1B in Q2 alone versus $7.5B a year earlier, a quiet but meaningful signal of how much the domestic retail margin has improved.

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What the Valuation Model Suggests at Current Prices

Amazon has pulled back roughly 11% from its July high near $287, which has brought the multiple down to around 28x forward earnings, a more reasonable entry point than the stock offered a few months ago.

The Street’s consensus target sits around $329, implying about 29% upside from here, and analyst sentiment remains broadly constructive on the combination of AWS reacceleration, advertising growth, and continued retail margin improvement.

The TIKR valuation model’s mid case lands at a price target of around $596 over the next 4.3 years, implying roughly 131% total return at around 22% annualized. Revenue growth is assumed at around 13% annually, net income margins expand toward 16%, and EPS grows around 16% per year.

The P/E compression assumption in the mid case is notably mild at only around 1% annually, which reflects the likelihood that the market sustains a premium multiple on AWS as long as the growth rate holds.

Push the horizon out to 2034, and the mid case reaches around $914 at roughly 16% annualized, a destination that rewards patient holders considerably.

Among the stocks covered in this analysis, the AMZN model produces one of the stronger outputs, and crucially, the business is actually delivering on the assumptions the model is built around right now.

Should You Buy Amazon Stock?

The bull case has real substance behind it. AWS growing at 37% while enterprises lean harder into AI infrastructure spending, advertising compounding alongside the retail flywheel, and North America margins at levels that would have seemed implausible in 2022 give Amazon a set of growth drivers that very few businesses can match at this scale.

The pullback from July has created a much better entry point than the stock offered at its highs, and the valuation model’s mid-case of around 22% annualized is compelling for a business of this quality.

The bear case is about valuation and the weight of expectations at $2.79T. Even modest disappointments translate into enormous swings in market value at this size, and the capital expenditure cycle Amazon is in right now, building out AI infrastructure at scale, is consuming a lot of cash.

Competition in the cloud from Microsoft Azure and Google Cloud is real and getting better funded every year. The retail side is always one consumer slowdown away from pressure, and the operating income recovery story has already driven a significant re-rating from the 2022 lows.

Investors buying today are paying for continued simultaneous execution across all three businesses, and there is not much room in the current price for any of them to stumble.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!