Amazon Is 11% Below Its High Heading Into Earnings on Oct. 29. Here's the 1 Number That Will Decide What Happens Next.
Key Points
AWS grew at its fastest rate in 18 quarters in the second quarter of 2026.
If it can maintain that momentum, its stock could command a higher valuation.
Amazon's (NASDAQ: AMZN) stock closed at its all-time high of $284.02 per share on Aug. 3, 2026. Today, it trades at about $254. Let's see why it pulled back about 11% -- and how one number could drive it higher or lower when it posts its third-quarter earnings on Oct. 29.
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What's the number everyone will be watching?
Amazon is the world's largest e-commerce and cloud infrastructure company. It generates most of its revenue from its retail business, but most of its operating profits come from Amazon Web Services (AWS), the world's largest cloud infrastructure platform.
AWS already hosts tens of millions of websites and apps, making it the backbone of the internet. It also hosts Bedrock, a managed service that enables organizations to build their own AI apps, SageMaker, a platform for training custom AI models, and a wide range of customized AI APIs. To support the growth of that AI ecosystem, Amazon is producing its own AI accelerator chips. Anthropic, in which Amazon owns a major stake, is one of AWS' leading customers.
AWS' year-over-year revenue growth has accelerated significantly over the past year, and its 36.7% growth in the second quarter marked its strongest growth in 18 quarters.
Metric |
Q2 2025 |
Q3 2025 |
Q4 2025 |
Q1 2026 |
Q2 2026 |
|---|---|---|---|---|---|
AWS Revenue Growth (YOY) |
17.5% |
20% |
24% |
28% |
36.7% |
Data source: Amazon. YOY = Year-over-year.
The AI market's explosive expansion drove AWS' growth, and analysts expect the segment's revenue to grow 30%-35% year over year in the third quarter. If it exceeds that range and accelerates for another consecutive quarter, its stock could soar higher. But if it falls short of that range, its stock could stumble -- since it's allocating most of its projected capex of $220 billion this year toward the expansion of AWS' AI infrastructure.
Will Amazon be revalued as a high-growth AI stock?
From 2025 to 2028, analysts expect Amazon's revenue and EPS to grow at CAGRs of 15% and 25%, respectively. Its stock still looks reasonably valued at 24 times next year's earnings -- but it could command a higher valuation if it's revalued as a high-growth AI infrastructure stock.
That's why investors should keep a close eye on AWS' growth rates in the third quarter, and whether or not Amazon raises its capex guidance again to support that expansion. If it maintains its high growth rates without significantly boosting capex, its stock could reach new highs in the near future.
Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.