Amazon Stock Could Surge Over 30% as AI Potential Remains Undervalued, Analysis Shows

Analysts See Significant Upside for Amazon Stock

Amazon shares could potentially rise more than 30% from current levels as investors continue to undervalue the company’s artificial intelligence story, according to recent analysis from KeyBanc Capital Markets. The financial firm reportedly resumed coverage of the e-commerce giant with an overweight rating and a $300 price target, suggesting nearly 36% upside from Thursday’s closing price.

Analysts See Significant Upside for Amazon Stock
AWS Positioned for AI-Driven Acceleration
Advertising Business Expansion
Grocery Business Growth Potential
Broader Market Context

Analysts suggest that Amazon’s current valuation presents an attractive entry point for investors. “With shares trading well below historical levels at 22.9x 2027E P/E, we believe this screens as an attractive entry point,” the report states, indicating that market participants may be overlooking Amazon’s growth potential.

AWS Positioned for AI-Driven Acceleration

Sources indicate that Amazon Web Services, the company’s cloud computing division, could be a primary driver of future growth. Despite investor concerns about competition, the analysis suggests AWS has been growing absolute revenue dollars near or better than competitors. According to the report, the ramp of gigawatt data center clusters through initiatives like Project Rainier and partnerships with customers such as Anthropic could potentially drive revenue acceleration into 2026.

“In short, we would be surprised if AWS was left behind in the AI revolution,” the bank wrote, highlighting that current market pessimism about AWS’s competitive position may be overstated. The improving growth trajectory for Amazon’s cloud business through 2026 is viewed as a significant catalyst for the stock.

Advertising Business Expansion

Amazon’s advertising segment could fuel additional gains in the company‘s retail operations, according to analysts. While the company primarily monetizes advertising on its owned platforms including Amazon’s e-commerce site, Twitch, and Prime Video, sources indicate the recent exploration of third-party advertising partnerships could boost total advertising growth.

The report suggests Amazon’s off-platform advertising business may be better positioned than competitors due to unique access to Amazon’s extensive data set. However, analysts note that advertisements on Amazon.com and Amazon Prime Video are expected to continue driving the majority of advertising revenue in the near term.

Grocery Business Growth Potential

Market analysis also highlights Amazon’s grocery business as another potential profit driver. According to reports, Amazon could continue taking market share from smaller, less technology-enabled grocers. The company reportedly plans to expand same-day perishables delivery to more than 2,300 U.S. cities by the end of 2025, significantly increasing from the current 1,000 cities.

This expansion in grocery delivery capabilities, combined with the company’s technological advantages, positions Amazon to capture additional market share in the competitive grocery sector, analysts suggest.

Broader Market Context

Amazon shares have added less than 1% year-to-date, underperforming broader market indices and some technology peers. The analysis from KeyBanc indicates this relative underperformance may present a buying opportunity for investors seeking exposure to the artificial intelligence sector through established companies with proven cloud infrastructure.

The combination of AWS’s positioning in the cloud computing market, advertising growth initiatives, and expansion in grocery delivery creates multiple pathways for Amazon to exceed current market expectations, according to the analysis.