Key Points
Amazon (NASDAQ: AMZN) hasn’t been a great investment over the past year. Since 2026 began, its stock has declined by more than 5%.
While it was positive for 2025, the negative price movement started in 2026 after Amazon’s poorly received fourth-quarter earnings report. The market sold the stock off by about 10% following earnings, and now the stock is down around 20% from its all-time high of just shy of $260.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
If Amazon could hit $260 by the end of 2026, that would indicate a new all-time high for the stock. So, could Amazon return to that level by the end of 2026? Let’s find out.
Image source: Getty Images.
Amazon’s earnings were fantastic
The 10% sell-off following the announcement didn’t have a lot to do with Amazon’s actual results. Amazon told investors to expect between $206 billion and $213 billion in revenue for Q4, with operating income coming in around $21 billion to $26 billion. But earnings crushed expectations, with actual revenue coming in at $213.4 billion (up 14% year over year) and operating income of $25 billion.
Within those results were several exciting stories, including Amazon Web Services (AWS), its cloud computing wing, delivering 24% growth — its best rate in over three years. A huge boost in this area has been Amazon’s custom chips designed in-house, which saw revenue climb in the triple digits.
Amazon is truly doing fantastic, but the issue was its capital expenditure guidance. Amazon told investors to expect $200 billion in capital expenditures for 2026, a massive increase from the $132 billion it spent over the past 12 months. This tanked the stock, but was it warranted?
Amazon has consistently traded in the low-30s forward earnings range, but now it’s in the mid-20s.
AMZN PE Ratio (Forward) data by YCharts.
I think this decline shows some skepticism in AI spending, but if growth for AWS continues to accelerate, don’t be surprised to see the stock gain all of its losses back and more. The market is in a “show-me” mood right now, and with Amazon spending massive amounts of money, the market wants to see a solid return on investment.
That will take time to pan out, but if Amazon can deliver expectation-beating quarters throughout 2026, I have no doubt that Amazon stock will rise back to its all-time high and break through the $260 level to establish a new high. But if AWS revenue growth starts to falter for some reason, the stock could move in the opposite direction.
Should you buy stock 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 $414,554!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,120,663!*
Now, it’s worth noting Stock Advisor’s total average return is 884% — a market-crushing outperformance compared to 193% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of February 15, 2026.
Keithen Drury has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.