Shares of Amazon (NASDAQ: AMZN) slipped more than 3% on Friday. This builds on a pullback in the stock over the last week, which has left shares down more than 9% over the past 5 trading days.
The stock’s slide, which comes along with a broader sell-off in chip stocks on Thursday and Friday, presents a timely question for investors: With the artificial intelligence (AI) spending boom showing no signs of cooling, is Amazon stock still a buy?
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A strong case can be made for buying Amazon stock here. While the bull case still starts with its fast-growing cloud computing business, there are other reasons to get excited about Amazon’s long-term potential as well. Alongside its cloud computing business, Amazon’s advertising and retail profitability are also climbing.
But the case against the stock is just as visible: the spending needed to keep all of this going appears astronomical.
AWS keeps accelerating
Amazon Web Services, the company’s cloud computing arm and its largest source of profit, grew 28% year over year in the first quarter of 2026 to $37.6 billion. That was an acceleration from 24% in the fourth quarter of 2025 and 20% in the third.
“It is very unusual for a business to grow this fast on a base this large, and the last time we saw growth at this clip, AWS was roughly half the size,” said Amazon CEO Andy Jassy during the company’s first-quarter earnings call.
Much of the reacceleration can be traced back to AI.
Companies training and running AI models are renting enormous amounts of computing power, and Amazon is increasingly supplying it with chips of its own design rather than relying solely on Nvidia. Its custom silicon, including Graviton, Trainium, and Nitro, now generates more than $20 billion in annual revenue run rate and is growing at triple-digit percentages.
The demand behind those figures shows up in Amazon’s commitments. The company recently expanded a cloud agreement with OpenAI, and AWS’s remaining performance obligations (RPO) (contracts signed but not yet counted as revenue) have swelled to $364 billion.
The other catalysts — and the cost
Two other parts of the business are quietly pulling more weight.
Amazon’s advertising revenue rose 24% in the first quarter to $17.2 billion, a high-margin business that now trails only Alphabet and Meta in digital advertising. And the retail operation most shoppers picture when they think of Amazon is finally profitable in a way it rarely has been: North America operating income jumped to $8.3 billion from $5.8 billion a year earlier, as quicker delivery and a leaner warehouse network cut the cost of each order. Additionally, the number of items sold across its stores grew 15% year over year, the quickest pace since the pandemic-era surge.
