Amazon Stock Forecast: Could AI and Chips Make AMZN a $4 Trillion Company?

Barring Nvidia (NVDA), which reports outside the usual earnings season, all other Magnificent 7 stocks have released their earnings for the March quarter. Alphabet (GOOG) (GOOGL) is by far the biggest winner this earnings season, and contrary to my expectations, the stock posted a nearly double-digit gain following its Q1 2026 earnings.

Amazon’s (AMZN) price action was, however, muted, and despite beating on both the top line and the bottom line, it closed almost flat. In my pre-earnings analysis, I had noted that the possibility of a post-earnings rally in Amazon looked dim, as much of the optimism was already priced in after the spike following the shareholder letter. In that letter, Jassy said that Amazon Web Services' (AWS) AI revenues were running at an annualized pace of $15 billion. He also said that if its chip business were a standalone company, its annual revenues would be $50 billion. The company reiterated these observations during the Q1 earnings call and further added that AWS is now a $150 billion annual revenue run rate business with an order backlog of $364 billion, which does not include the $100 billion in commitments from Anthropic that the two companies recently announced.

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AI Is Redefining the Market Cap Pecking Order

Meanwhile, AI has been redefining the market cap pecking order among Big Tech companies. Apple (AAPL), which is widely seen as an AI laggard, has lost its position as the world’s biggest company even though it is still a $4 trillion behemoth. Microsoft (MSFT), which at one point surpassed Apple to become the world’s biggest company and commanded a market cap of over $4 trillion at the peak, is now barely a $3 trillion company.

Nvidia became the world’s first company to hit a $5 trillion market cap, but its stock has been stuck in a tight range for quite some time now amid concerns over rising chip competition. Alphabet is the latest AI favorite for markets, and the Google parent looks on track to become the next $5 trillion company. Tesla (TSLA) is a $1.2 trillion company, and while it is perhaps the most prominent physical AI play in the U.S., the company is at least a few years away from realizing meaningful revenues from its AI initiatives. Meta Platforms (META), which was on the cusp of becoming a $2 trillion market cap company, hasn’t been able to convince investors that it would be able to monetize its AI capex as effectively as other hyperscalers whose cloud business is growing at a stellar pace due to AI demand.

Amazon Stock Forecast

All said, I would argue that Amazon looks well placed to become the next $4 trillion market cap company. Here is my bullish thesis for Amazon after its Q1 2026 earnings.

Instant Deliveries and Groceries: Instant deliveries and groceries are the next frontier for e-commerce companies, and Amazon has doubled down on both. It is already the second biggest grocer in the U.S. and is gradually expanding its one-hour and three-hour deliveries. These initiatives will help buoy the growth of its e-commerce business.
The AI Opportunity: Many of us know Amazon for its e-commerce platform, which happens to be the largest globally, but the company has several other businesses. These include the highly lucrative AWS, which generated an operating income of $14.2 billion at a healthy margin of nearly 38% and accounted for almost 60% of the company’s Q1 operating income. Amazon is also scaling up its chip business, and its Trainium3 chips that it started shipping earlier this year are almost fully subscribed. Also, much of its Trainium4 chips, which won’t be available broadly for 18 months, have been reserved. In addition, Meta has committed to using “tens of millions of Graviton cores,” which is Amazon’s CPU. Chips and AI-led cloud demand could help drive Amazon’s growth over the next few years.
New Businesses: Amazon has invested in several new businesses. These include the Leo satellite network that is set for a mid-2026 launch. The company has secured commitments from both private enterprises and government agencies for its satellites. Its Zoox self-driving unit is available in Los Angeles and San Francisco and has driven over 2 million miles. Amazon is testing the service in eight other cities and has partnered with Uber (UBER) to bring its fleet to the ride-hailing company’s platform in Los Angeles and Las Vegas.

Amazon trades at a forward price-to-earnings (P/E) multiple of 33.7x, which I find quite reasonable given the kind of diversified business and earnings growth it brings to the table. Overall, I remain invested in AMZN stock and expect it to become the next $4 trillion behemoth by the end of 2027, primarily on the back of its AI and chip businesses.

On the date of publication, Mohit Oberoi had a position in: AMZN , TSLA , META , NVDA , MSFT , GOOG . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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