Data center infrastructure is becoming one of the biggest spending races in the market. Deal activity in the sector hit a record $61 billion in 2025, demonstrating the rapid pace at which companies are securing enough data center space and computing power for artificial intelligence work. And this is further fueled by generative AI workloads that push the power and capacity of today’s servers to their limits.
Demand for AI-ready data centers is growing so quickly that supply could fall behind. That’s why the biggest cloud providers are rushing to add more capacity, as well as specialized chips and better cooling systems. One of the most obvious winners from this shift is Amazon (AMZN), as AWS is spending heavily to stay ahead as spending on AI infrastructure continues to rise.
Amazon has already doubled AWS’s power capacity since 2022 and added 3.8 gigawatts in the last year alone, more than any other cloud provider, and plans to double that again by 2027 to meet demand for AI. At the same time, Amazon’s Trainium-based AI infrastructure has become a multi-billion dollar business, posting triple-digit growth as AWS invests in custom silicon and large-scale data center expansions to support AI-driven workloads.
With global data center revenue expected to reach approximately $739.05 billion by 2030, can Amazon’s large-scale expansion turn this data center supercycle into significant upside potential for its stock in 2026? Let’s find out.
As the world’s largest online retailer and cloud provider, Amazon runs a broad business that spans e-commerce, subscription services, digital advertising and its main cloud arm, Amazon Web Services (AWS), which remains the company’s main profit driver.
Over the past year, Amazon stock has risen slowly but steadily, gaining 3.15% over the past 52 weeks and 5.81% year to date (YTD).
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Furthermore, the valuation shows that investors are willing to pay for these prospects, with a forward price-to-earnings ratio of 31.7x, well above the industry average of 17.87x, indicating that the market expects higher earnings from Amazon than the typical peer group.
This view is supported by the latest financial results. For the third quarter ended September 30, 2025, Amazon reported net revenue of $180.2 billion, up 13% from the previous year. Operating profit amounted to $17.4 billion. But without special charges of $2.5 billion related to a legal settlement and $1.8 billion in severance payments planned for job cuts, operating profit would have been $21.7 billion.
Net income rose to $21.2 billion, or $1.95 per diluted share, from $15.3 billion last year. Free cash flow fell to $14.8 billion, primarily due to a $50.9 billion increase in property, plant and equipment investments, underscoring Amazon’s substantial investment in developing its infrastructure, particularly cloud and data center capacity, to support its next stage of growth.
Amazon expanded its Nova portfolio this year and directly strengthens its AI infrastructure tied to the data center demand that is shaping the growth story in 2026. The company introduced four new Frontier Nova models as well as Nova Forge, a service that allows organizations to create their own versions of custom models using an “open training” approach that incorporates proprietary data early in the process. Amazon also deployed Nova Act, which achieved a 90% reliability rate for browser-based automation workflows, giving businesses a more reliable way to automate online tasks as they scale their digital operations.
Additionally, Amazon has upgraded Bedrock AgentCore with real-time policy-based controls that block unauthorized agent actions, as well as AgentCore assessments for continuous quality checks. It also added AgentCore Memory, which helps AI agents learn from past experiences so that decision-making improves over time. Organizations such as Cohere Health, Thomson Reuters and S&P Global Market Intelligence already use AgentCore in their production deployments.
Meanwhile, Amazon has expanded its work with SolarWinds, allowing the IT management company to integrate generative AI through Amazon Bedrock. The partnership supports AI-driven automation and observability for SolarWinds, highlighting how AWS is becoming the underlying AI infrastructure that many large enterprises rely on.
For the fourth quarter of 2025, management forecasts net revenue between $206.0 billion and $213.0 billion, which would mean 10% to 13% year-over-year (YOY) growth. Operating profit is expected to be between $21.0 billion and $26.0 billion, compared to $21.2 billion in the same quarter last year. The next earnings release is scheduled for February 5, 2026, and analysts expect earnings of $1.97 per share for the current quarter and $7.17 for the full year 2025. This equates to an estimated annual growth of 5.91% for the quarter and 29.66% for the full year.
This outlook is part of why Oppenheimer recently raised its price target for Amazon from 290 to 305. The company highlighted Amazon’s plan to double AWS capacity by 2027. It also suggested that each additional gigawatt could generate about $3 billion in revenue, which could have a “significant” impact on cash flow as more data centers come online in this AI-intensive environment. Barclays analyst Ross Sandler made a similar point, saying that “AWS has secured significant AI capacity over the next few years,” and his team expects growth to accelerate from there as more AI work moves toward this expanded capability.
Overall, the 56 analysts surveyed gave Amazon a “Strong Buy” consensus rating, with 49 “Strong Buy,” five “Moderate” and two “Hold.” The average price target of $295.80 suggests an upside of approximately 27.4% from the current level.
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Amazon appears to be one of the cleanest ways to play out the $61 billion data center supercycle through 2026, with infrastructure spending led by AWS, growing demand for AI, and a comprehensive product roadmap all heading in the same direction. The company is leaning heavily on power capacity, custom silicon, and native AI services at precisely the moment when businesses are scrambling for compute. Furthermore, Wall Street clearly likes what it sees, with strong earnings growth estimates and implied upside potential of around 30% from there. Nothing is guaranteed, but if investments in data centers and AI remain on their current trajectory, Amazon shares appear more likely to climb than stagnate.
As of the date of publication, Ebube Jones did not have (directly or indirectly) any position in any of the securities mentioned in this article. All information and data contained in this article are for informational purposes only. This article was originally published on Barchart.com
