Amazon Sell-Off to Spark Major Rebound in 2026, Experts Predict
Recent stock movements have sparked discussions around Amazon’s future, particularly following a notable sell-off. Experts predict this dip could pave the way for a major rebound in 2026.
Current State of Amazon’s Stock
Following its latest quarterly update, Amazon’s stock experienced a decline of approximately 6%. The drop was attributed to two primary factors: a miss on Wall Street’s earnings expectations and substantial projected capital expenditures for the upcoming year.
Earnings Analysis
- Earnings per Share: Amazon reported an EPS of $1.95 in Q4, slightly below the expected $1.97.
- Impact of Special Charges: The company’s operating income was reduced by special charges totaling $2.4 billion, which lowered the EPS by about $0.22.
- Revenue Highlights: Despite the earnings miss, Amazon’s revenue reached $213.4 billion, surpassing the forecast of $211.3 billion.
Future Capital Expenditures
Amazon has forecasted capital expenditures of $200 billion for this year, a significant increase from $132 billion in 2025. While this surge in spending raised some eyebrows among analysts, it primarily aims at enhancing Amazon Web Services (AWS).
Amazon Web Services (AWS) Growth
- Revenue Growth: AWS saw a 24% year-over-year revenue increase in Q4, marking the highest growth rate in 13 quarters.
- Annualized Revenue Run Rate: AWS concluded 2025 with a $142 billion run rate.
- Backlog Expansion: The backlog for AWS increased by 40% year-over-year, amounting to $244 billion.
Advertising and E-commerce Performance
Amazon has also made headway in the advertising sector, with ad revenue jumping 22% to $21.3 billion in Q4. Sponsored product advertising continues to yield significant income, alongside Prime Video ads contributing to overall revenue growth.
Competitive Pricing Strategy
In a recent study, Amazon was identified as the lowest-cost retailer in the U.S. for the ninth consecutive year. Prices averaged 14% lower than those of other leading online retailers, enhancing customer loyalty and shopping frequency.
Long-term Outlook for Investors
Short-term sell-offs present opportunities for savvy investors. Amazon’s strong market position, supported by its extensive scale and competitive pricing, suggests substantial long-term potential. Experts maintain confidence that Amazon’s stock will rebound following its current decline.
With its robust business model and consistent investment in growth areas like AWS and advertising, analysts predict that the company is well-positioned for a significant recovery by 2026.
