Wall Street’s Top Trillion-Dollar Pick for 2025 (Spoiler: It’s Still Not Nvidia)

Forget the hype—Wall Street's flashing a giant buy signal on a trillion-dollar titan that isn't riding the AI gravy train. Here's why the smart money's pivoting.

The Contender You Didn't See Coming

While retail traders pile into chip stocks, institutional whales are quietly accumulating a legacy tech giant with 40% upside—and dividends that actually exist.

The Cynical Kicker

Analysts love it now, but remember: these are the same geniuses who told you to hold Meta at $380 in 2022. Do your own homework—their price targets have expiration dates.

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Amazon stock has declined 10% since the company reported second-quarter results

Amazon reported second-quarter financial results that crushed estimates on the top and bottom lines. Sales increased 13% to $168 billion on particularly strong revenue growth in the advertising segment, coupled with solid momentum in the retail and cloud segments. Operating margin expanded 150 basis points, and GAAP earnings increased 34% to $1.68 per diluted share.

Management provided the following third-quarter guidance: Revenue will increase 11% to $177 billion, and operating income will increase 3% to $18 billion. Investors were disappointed by the weak earnings forecast. That, coupled with somewhat underwhelming growth in cloud computing sales, has caused the stock to drop 10% since the company reported its second-quarter financial results.

I think the market got this wrong. Amazon's cloud sales may have increased more slowly than Microsoft's and Alphabet's, but its sales growth is also measured on a much larger base. Amazon accounted for 30% of cloud infrastructure and platform services spending in the second quarter, while Microsoft and Alphabet accounted for 20% and 13%, respectively.

Also, Amazon gave somewhat disappointing guidance for operating income, but caution is warranted given the tariff landscape. Moreover, the same thing happened last quarter and the company beat expectations. Not surprisingly, Wall Street remains broadly optimistic. More than a dozen analysts revised their target prices higher after the second-quarter report.

Amazon is ideally positioned to benefit from artificial intelligence in retail and cloud computing

The investment thesis for Amazon centers on its strong presence in three large industries. It runs the largest e-commerce marketplace worldwide by revenue, and the most popular by web traffic. It is the third largest ad tech company in the world by revenue, and the leader in the retail advertising segment. And Amazon Web Services (AWS) is the largest public cloud by infrastructure and platform services spending.

analyst Brian Nowak earlier this year called Amazon an underappreciated leader in generative artificial intelligence (AI) across its retail and cloud businesses. Details are provided below:

• Retail: Amazon has developed more than 1,000 generative AI applications to make its retail operations more efficient, including systems that optimize inventory placement, demand forecasting, and last-mile delivery. The company has also developed an AI model that lets robots navigate warehouses faster, and it's building an AI model that will let workers engage robots conversationally. Finally, Amazon is preparing to test humanoid robots for package delivery.
• Cloud: AWS has designed custom chips for AI training and inference that offer better price performance than the current generation of GPUs, according to management. It has also introduced a generative AI development platform called Bedrock, and more recently added tools that help clients build and scale AI agents. AWS is also the primary cloud provider for Anthropic, which could lead to an acceleration in cloud revenue in the coming quarters because the AI start-up is growing rapidly.

Importantly, Amazon has an opportunity to monetize artificial intelligence beyond its Core retail and cloud businesses. Its subsidiary Zoox is building robotaxis, and the company will launch its first autonomous ride-hailing service in Las Vegas this year, followed other cities shortly thereafter. Morgan Stanley estimates Zoox could have commercial robotaxi services in seven U.S. cities by 2028.

Amazon has consistently exceeded Wall Street's expectations

Wall Street estimates Amazon's earnings will increase at 10% annually through 2026. That makes the current valuation of 32 times earnings look somewhat expensive. But analysts have consistently underestimated the company. Amazon topped the consensus earnings estimate by an average of 22% in the last six quarters.

Going forward, I think Amazon will continue to beat expectations as it leans on AI across its retail and cloud businesses, and branches into new markets like autonomous ride-hailing. Patient investors should feel comfortable buying a few shares of this growth stock today.