Amazon Stock Set to Reverse 7-Year Slump as Analysts Predict Major Turnaround
Wall Street's perennial underdog is finally getting its day.
Amazon stock—yes, that Amazon—has spent the better part of a decade lagging behind its mega-cap tech peers. Seven years of sideways action, missed breakouts, and investor frustration. But something's shifting. The whispers in trading rooms have turned into full-throated calls: the tide is turning.
The Setup for a Reversal
Forget the old narrative. This isn't about retail dominance or cloud growth—those are baked in. The new thesis hinges on structural shifts within Amazon's sprawling empire. Margins are expanding in places analysts didn't expect. Cash flow is surging, and that cash is being deployed with a newfound aggression that shareholders have craved.
It's a classic case of a giant learning to move like a startup again. They're cutting fat, bypassing bureaucratic inertia, and doubling down on what actually works. The market hates complacency, and Amazon seems to have finally remembered that.
The Catalyst No One Saw Coming
The real kicker? It's not just one thing. It's a confluence of operational discipline, regulatory tailwinds (for once), and a tech landscape where Amazon's integrated ecosystem suddenly looks like a fortress rather than a sprawl. Competitors are fragmenting. Amazon is consolidating its power.
Of course, the finance crowd remains skeptical—always a good sign. They've been burned before, watching from the sidelines as other stocks ripped higher. Their cynicism is the kind of fuel that sustains a rally, right up until they're forced to chase it. Nothing moves a stock like a herd of analysts simultaneously upgrading their price targets to save face.
The bottom line: the pieces are in place. The patience play is over. Momentum is building for a run that could finally rewrite the last seven years of charts. Don't be the last one to notice.
Amazon trails in tech stock gains but bulls say it’s still cheap
Amazon had the worst return in the Magnificent Seven last year. It only gained 5% in 2025, while the Nasdaq 100 shot up 20%.
That made it seven straight years where Amazon underperformed the group. It started 2026 with a small jump, even after a 3.4% drop on Tuesday, and it’s still ahead of everyone except Alphabet.
Because of that weak run, the stock is now trading way cheaper than its rivals. Amazon is priced at 24 times projected earnings over the next year. That’s less than Apple, Microsoft, or Alphabet. It’s also way below Amazon’s five-year average of 36. This is why the bulls are leaning in.
They’re pointing at what happened to Alphabet. The company was seen as losing the AI race for years. It underperformed both Amazon and the rest of the Magnificent Seven in 2023 and 2024.
Then in March 2025, Alphabet dropped the latest version of its Gemini AI model, and the stock took off. It’s up 89% since then, the best in the group and one of the best in the S&P 500.
“It looks like Google did 18 months ago,” said Nancy Tengler, who runs Laffer Tengler Investments. “Things can change very quickly in this sector of the business.”
Cloud growth and OpenAI deals push up analyst forecasts
For most of 2025, investors thought AWS was falling behind. But Brian White, an analyst at Monness Crespi Hardt, said Amazon turned that around with its latest earnings and the OpenAI news.
“Amazon flipped this narrative on its head,” he wrote in a note on December 22. WHITE recommends buying the stock. So do 95% of analysts surveyed by Bloomberg earlier this month.
The financials are starting to reflect all that. Analysts now expect earnings per share to grow 12% in 2026, and then jump another 22% in 2027. Revenue is forecast to rise 11% each year. Operating income is expected to go up 26% this year and 24% in 2027.
Over the past six months, estimates for 2026 net income have climbed 8.2%, and revenue expectations ROSE 4.2%.
Clayton Allison, who manages money at Prime Capital Financial, owns Amazon stock. He said, “It’s the AI name that hasn’t gotten the love. It has built out the AI infrastructure everyone wants to use, it’s the e-commerce giant, and it is trading at a discount.”
All this is happening while global markets are a mess. The U.S. is threatening economic war over Greenland. Japan’s political chaos is shaking up bonds. Trump’s White House is still going after the Federal Reserve, raising questions about its independence.
That kind of backdrop WOULD usually kill risk appetite. But stocks dropped Tuesday, and strategists still aren’t panicking. They say markets usually recover fast from geopolitics, unless oil prices spike. Brent and WTI both rose Tuesday, but they’re still way under long-run averages.
Alastair Pinder at HSBC said on January 20 that markets bounce back two-thirds of the time after these types of events. “The main exception comes when geopolitics drives oil prices sharply higher.” Right now, that’s not happening.
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