Amazon Stock Slips 10%: Here's Why It Can Still Finish 2025 With a Market Cap of $3 Trillion
Amazon stock is dipping because of slowing growth in AI.
The company can greatly expand its margins in retail and e-commerce.
The stock has a chance to grow to a $3 trillion market cap if 2026 earnings hit a level well within reach.
10 stocks we like better than Amazon ›
Last week, Amazon (NASDAQ: AMZN) reported its second-quarter earnings. Investors were not enthused. The stock dipped 10% and is now trailing the valuation of its big technology peers, with Nvidia and Microsoft having market caps of around twice the size of Amazon today. Wall Street is concerned about slower growth in cloud computing and Amazon falling behind in artificial intelligence (AI).
This pins the stock down on one topic when in reality Amazon has all the ingredients to keep growing its profits over the long term, which is what will drive the share price higher. Here's why Amazon -- with a market cap of $2.3 trillion right now -- can finish 2025 valued at over $3 trillion.
More profits arriving in e-commerce
The biggest reason for Amazon's profit expansion in its e-commerce division the last few years is advertising. High-margin advertising revenue has grown from $7.4 billion in the second quarter of 2021 to $15.7 billion last quarter, and is still growing 22% year over year. This division has now generated $61 billion in revenue over the last 12 months and has incredibly strong profit margins.
Advertising, along with growth in third-party seller services, subscription revenue, and operating leverage over its fixed cost base, has enabled Amazon's North American retail division to expand its profit margin to 7% over the last 12 months. Through the rest of 2025, there is plenty of room for this expansion to keep occurring, which will have a large impact on profitability given how much revenue the division generates ($400 billion over the last 12 months). Even slight profit margin enhancements mean billions of dollars in extra earnings for Amazon.
The same thing is happening in international markets, where Amazon has a 3.4% operating margin on $150 billion in revenue. These segments are behind North America but have the same business model at the end of the day, meaning there is even more room for margin expansion over the long haul.
Over $500 billion in annual revenue for segments growing revenue in the double digits means Amazon can add tens of billions of dollars in earnings power from North America and international retail in the years to come just by expanding its profit margin slightly each year. Through the rest of 2025, this story will continue to unfold.
Sustained cloud computing tailwind
A once shining star of Amazon's business, cloud computing division Amazon Web Services (AWS) was the reason for the stock falling after its latest quarterly result. Revenue grew 17.5% for AWS in the quarter, which was well behind competitors Microsoft and Alphabet.
Even though AWS is growing slower than its peers, it will still benefit greatly from the AI revolution, especially because of its relationship with Anthropic. The fast-growing AI start-up is seeing booming revenue and is planning to spend a boatload of money at AWS, its key partner. This can drive an acceleration of revenue growth for AWS through the rest of 2025. With over $130 billion in annualized sales, AWS is on a path to hitting close to $150 billion in annual recurring revenue by the end of 2025.
Its profit margin is also strong, at 37% over the last 12 months. A strong profit margin and fast revenue growth mean huge earnings gains for AWS, which will lead to consolidated earnings gains for Amazon.
AMZN Operating Income (TTM) data by YCharts
The math to a $3 trillion valuation
Over the last 12 months, Amazon has generated $76 billion in operating income and $70 billion in net income. Through continued margin expansion in retail and fast growth at AWS, both of these figures can keep chugging higher through the end of 2025. In 2026, it is likely that Amazon's annual earnings will be close to or exceed $100 billion.
Today, Amazon trades at a forward price-to-earnings ratio (P/E) of 33. The S&P 500 index trades at a P/E ratio of close to 30. A forward P/E ratio of 30 and $100 billion in 2026 earnings means that Amazon would trade at a market cap of $3 trillion by the end of this year. That is the math behind Amazon's potential in 2025, and why the stock is set to surge in the next few quarters. Buy Amazon stock and hold on tight for the long term.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!*
Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of August 4, 2025
Brett Schafer has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
7 minutes ago
- Globe and Mail
Exchange Bank Promotes Stacy McKee to Vice President & Controller
Exchange Bank (OTC: EXSR) is pleased to announce the promotion of Stacy McKee to Vice President & Controller. This well-earned promotion recognizes Stacy's long-standing commitment and impactful contributions to the Bank's Finance team. This press release features multimedia. View the full release here: McKee began her career at Exchange Bank in February 2003 as an Accounting Specialist. Over the past 22 years, she has steadily advanced through leadership roles, including Accounting Supervisor in 2012, Assistant Vice President and Assistant Controller in 2018, and most recently, Vice President and Controller. Throughout her tenure, she has led numerous projects and implemented key financial processes that have strengthened the Bank's operations. 'Stacy's promotion is well deserved. She has been an integral part of our Finance team and is known for her collaborative spirit, steady leadership, and deep institutional knowledge,' said Charlotte Radmilovic, SVP and Chief Financial Officer of Exchange Bank. 'I am thrilled to announce her advancement to Vice President & Controller. Stacy brings a thoughtful and supportive approach that will continue to strengthen our team and culture.' McKee's academic accomplishments reflect her dedication to continual growth. She earned both an Associate of Arts degree and an Account Clerk Certificate from Santa Rosa Junior College in 2000 and went on to complete her Bachelor of Science degree with a concentration in Accounting from Eastern Oregon University in 2014. In her new role, McKee will oversee the Bank's financial reporting and accounting operations, while continuing to drive process improvements and support regulatory compliance. She will also play a key role in mentoring and developing the Finance team, helping to ensure the Bank's continued financial strength and operational excellence. About Exchange Bank Headquartered in Sonoma County and founded in 1890, Exchange Bank is a full-service community bank with assets of $3.27 billion. Exchange Bank provides a wide range of personal, commercial, and trust and investment management services with 17 retail branches in Sonoma County, a retail branch in Roseville and Trust & Investment Management offices in Santa Rosa, Roseville, Marin County and Silicon Valley. The Bank's legacy of financial leadership and community support is grounded in its core values of commitment, respect, integrity, and teamwork. Exchange Bank is known for its people who care about their customers, their company, and the communities where they live and work. Exchange Bank is a 19-year winner of the North Bay Business Journal's Best Places to Work survey and a 13-time winner of the Best Bank of Sonoma County by the Press Democrat's Readers' Choice 2024 awards. Exchange Bank was named Best Consumer Bank by the NorthBay biz Magazine's Best of the North Bay readers' poll and Best Local Bank by The Petaluma Argus Courier People's Choice Awards 2025. Exchange Bank is also a winner of the 2024 San Francisco Business Times Corporate Philanthropy award, and the Bohemian Magazine's Best of the North Bay 2024 named Exchange Bank Best Business Bank and Best Consumer Bank.
National Post
7 minutes ago
- National Post
Modern Health Welcomes New Chief Technology Officer and General Counsel
Article content New Data from Modern Health Reinforces Proven Model and Offers Fresh Insight into Evolving Workforce Needs Article content SAN FRANCISCO — Modern Health, a leading global workplace mental health platform, today announced the appointments of Chen Cheng as Chief Technology Officer and Erin Brown as General Counsel, along with other company momentum, as it accelerates its mission to make mental health care more accessible, personalized, and effective worldwide. Article content In her role as Chief Technology Officer, Chen Cheng will oversee the company's technology and further scale the platform to provide high-quality, clinically rigorous care across the globe. She brings more than a decade of experience in the health technology sector to Modern Health, including roles at Oscar Health and ZocDoc. As technology plays an increasingly critical role in expanding access to mental health care and support, evidenced by the growing engagement with virtual therapy, coaching, and digital tools, Chen will leverage her tech experience and leadership to help Modern Health advance its innovations. Article content Erin Brown joins Modern Health as General Counsel, bringing more than 20 years of legal experience across the health and benefits space. Brown has amassed a proven track record of guiding high-growth organizations through complex legal and regulatory environments. Prior to Modern Health, Brown was Senior Vice President and Associate General Counsel at Alight Solutions and, before that, Associate General Counsel at Aon Hewitt. Her expertise and strategic counsel will be key as Modern Health continues to expand its global footprint and innovate responsibly in a rapidly evolving industry. Article content 'Welcoming exceptional leaders like Chen and Erin marks an exciting step forward for Modern Health,' said Matt Levin, CEO of Modern Health. 'They each bring a powerful combination of industry expertise and a passion for making mental health care more accessible, personalized, and effective. Their leadership will accelerate our momentum as we scale our impact, drive innovation, and continue delivering meaningful outcomes for the workplaces we support worldwide.' Article content In addition to these appointments, other recent company momentum includes: Article content Modern Health has been named to the 2025 Inc. 5000 list of the fastest-growing private companies in America. The list highlights companies that have demonstrated significant revenue growth over a three-year period and serves as a benchmark for entrepreneurial success and a platform for recognizing the contributions of these businesses to the US economy. Modern Health launches ROI Study that proves mental health care pays off: According to a third-party analysis of 13,000+ members, the most significant savings (60% of total savings) in health care spend for employers come from reaching more employees earlier with support that fits their needs before symptoms escalate. Modern Health's evidence-based Adaptive Care Model delivers an estimated $2.39 return for every dollar invested, based solely on health care cost savings. These compelling findings underscore how Modern Health's Adaptive Care Model improves outcomes and drives down costs by supporting the whole workforce—not just those with severe mental health concerns. Peer-reviewed data shows Modern Health's global mental health model works anywhere: In one of the largest and most diverse real-world studies of its kind, Modern Health examined engagement and clinical outcomes among more than 33,000 members across seven global regions to understand not only how mental health needs vary across regions but also whether a single care model could truly work at a global scale. The study proves that achieving global scale requires more than a one-size-fits-all approach; it demands an adaptive, evidence-based model designed to deliver meaningful results across diverse regions and populations. Modern Health's latest study paints a stark picture of how Gen Z and Millennial employees are faring: In a study of 1,000 American professionals aged 18 to 44, the findings reveal a generation silently struggling under the weight of burnout, financial anxiety, and workplace systems that haven't kept pace with their needs. Among the most striking statistics: 75% blame financial stress for fueling burnout and hurting productivity, 79% sacrifice mental health to meet work demands, and 96% want access to preventative mental health support. The workplace report highlights a troubling reality: too many young workers are quietly pushing through mounting mental health challenges just to keep up at work, underscoring the urgent need to meet people earlier, with care that's proactive, adaptive, and designed to support the mental health of entire workforce populations. Launch of FlexEAP Challenges Outdated Employee Assistance Programs: Modern Health recently launched FlexEAP ('Flex'), a next-gen Employee Assistance Program (EAP) addressing the critical shortcomings of traditional EAPs by delivering rapid access to care, adaptive support extending far beyond crisis intervention, and a seamless, consistent global experience. The product combines Modern Health's Adaptive Care Model with an elite, global provider network to deliver a seamless, personalized mental health experience. Employees can access care, on average, within 24 hours, with fast, frictionless support across therapy, coaching, crisis intervention, and digital self-guided tools. Flex delivers superior outcomes and an upgraded, consumer-grade experience compared to traditional EAPs, while offering flexible pricing, customizable solutions, and risk-sharing based on utilization—empowering employers to better manage costs. Expanded Languages for Pathways: Modern Health is proud to offer its Pathways Collections, offering tailored one-on-one support around a variety of topics, including Workplace Well-being, Family Care, and Physical Well-Being, as a truly multilingual product. Now, members can connect with a Pathway Provider in six additional languages — Spanish, Dutch, Hindi, Portuguese, Japanese, and French. Article content About Modern Health Article content Modern Health is a global leader in adaptive mental health care, dynamically offering multi-modal mental health support that delivers meaningful outcomes at a sustainable, predictable cost. With therapy, psychiatry, coaching, community groups, self-guided tools, and crisis support, we dynamically create individualized care journeys to address a spectrum of mental health needs and preferences with culturally responsive providers in 200+ countries and territories and 80+ languages. Backed by peer-reviewed research and a proprietary blend of technology and live support, Modern Health delivers measurable outcomes, globally equitable access, and sustainable pricing. Our industry-leading Adaptive Care Model and dedicated, human centered, operationally tuned, customer success partners make us a trusted partner for organizations worldwide. Article content Article content Article content Article content Article content
Globe and Mail
7 minutes ago
- Globe and Mail
Deadline Approaching: Lineage, Inc. (LINE) Investors Who Lost Money Urged To Contact Law Offices of Howard G. Smith
Law Offices of Howard G. Smith reminds investors of the upcoming September 30, 2025 deadline to file a lead plaintiff motion in the case filed on behalf of investors who purchased Lineage, Inc. ('Lineage' or the 'Company') (NASDAQ: LINE) common stock pursuant and/or traceable to the registration statement used in connection with the Company's July 2024 initial public offering (the 'IPO'). IF YOU ARE AN INVESTOR WHO SUFFERED A LOSS IN LINEAGE, INC. (LINE), CONTACT THE LAW OFFICES OF HOWARD G. SMITH TO PARTICIPATE IN THE ONGOING SECURITIES FRAUD LAWSUIT. Contact the Law Offices of Howard G. Smith to discuss your legal rights by email at howardsmith@ by telephone at (215) 638-4847 or visit our website at What Happened? In July 2024, Lineage conducted its IPO, selling over 65 million shares of common stock at $78 per share. On November 6, 2024, Lineage released its third quarter 2024 financial results, revealing that it had suffered a $543 million net loss during the quarter. On this news, Lineage's stock price fell $5.22, or 7.4%, to close at $65.79 per share on November 6, 2024, thereby injuring investors. Then, on January 14, 2025, The Wall Street Journal reported that Lineage was laying off employees due to reduced customer demand only six months after its IPO. Then, on April 7, 2025, Lineage announced the dismissal of its auditor, KPMG LLP. On this news, Lineage's stock price fell $5.29, or 9.9%, over two consecutive trading days, to close at $48.41 per share on April 8, 2025. Then, on April 30, 2025, Lineage reported first quarter 2025 financial results, including that '[t]otal revenue decreased (2.7)%' to $1.29 billion for the quarter. The Company stated it 'experienced more normal seasonal trends in the first quarter after multiple years of elevated inventory levels.' On this news, Lineage's stock price fell $8.16, or 14.62%, to close at $47.65 per share on April 30, 2025, thereby injuring investors further. On June 3, 2025, the Company stated at an Investor Conference that there has been 'pretty much flat demand' for Lineage's products and services and that the Company was operating in a 'flattish environment' in terms of demand. The price of Lineage stock has remained substantially below the IPO price at the time of this complaint's filing. What Is The Lawsuit About? The complaint filed in this class action alleges that the Registration Statement made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Lineage was then experiencing sustained weakening in customer demand, as additional cold-storage supply had come on line, the Company's customers destocked a glut of excessive inventory built up during the COVID-19 pandemic, and the Company's customers shifted to maintaining leaner cold-storage inventories on a go-forward basis in response to changed consumer trends; (2) that Lineage had implemented price increases in the lead-up to the IPO that could not be sustained in light of the weakening demand environment facing the Company; (3) that Lineage was unable to effectively counteract the adverse trends listed in the foregoing through the use of minimum storage guarantees or as a result of operational efficiencies, technological improvements, or its purported competitive advantages; (4) that, as a result of the foregoing, rather than enjoying stable revenue growth, high occupancy rates, and steady rent escalation as represented in the Registration Statement, Lineage was in fact suffering from stagnant or falling revenue, occupancy rates, and rent prices; and (5) as a result, Defendants' positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times. If you purchased or otherwise acquired Lineage common stock pursuant and/or traceable to the IPO, you may move the Court no later than September 30, 2025 to ask the Court to appoint you as lead plaintiff if you meet certain legal requirements. Contact Us To Participate or Learn More: If you wish to learn more about this class action, or if you have any questions concerning this announcement or your rights or interests with respect to these matters, please contact us: Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, Telephone: (215) 638-4847 Email: howardsmith@ Visit our website at: To be a member of the class action you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the class action. This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
