Amazon Is 11% Below Its High Heading Into Earnings on Oct. 29. Here's the 1 Number That Will Decide What Happens Next.
Key PointsAWS grew at its fastest rate in 18 quarters in the second quarter of 2026.
Amazon's stock has fallen 11% from its all-time high of $284.02 per share, now trading around $254 as of October 2026. This decline can be attributed to several factors, primarily the performance of its Amazon Web Services (AWS) division. AWS, the backbone of the internet, hosts millions of websites and applications and has seen significant year-over-year revenue growth, with a notable 36.7% increase in the second quarter, marking its strongest growth in 18 quarters.
Analysts are expecting the segment's revenue to grow by 30%-35% year over year in the upcoming third quarter, driven by the exponential expansion of the AI market. If AWS continues to accelerate its growth, Amazon's stock could soar higher. However, if AWS fails to meet these expectations and AWS' capex allocation remains a major focus, the stock may stumble.
Amazon is allocating a substantial portion of its projected $220 billion capex this year towards expanding AWS' AI infrastructure. In the long term, analysts anticipate Amazon's revenue and EPS to grow at compound annual growth rates (CAGRs) of 15% and 25%, respectively. Currently, Amazon's stock appears reasonably valued at 24 times next year's earnings, but it could potentially fetch a higher valuation if it is revalued as a high-growth AI infrastructure stock.
Therefore, investors should closely monitor AWS' growth rates in the third quarter and whether Amazon raises its capex guidance to sustain this expansion. If Amazon maintains its high growth rates without significantly raising capex, its stock could reach new highs in the near future.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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