The past year has shown that the Magnificent 7, as the best stock bets to own, was overhyped. Case in point: Amazon (AMZN).

Its stock has gained about 2% over the past year, at the time of writing, Tuesday morning, Feb. 3, according to Yahoo Finance. Meanwhile, the SPDR S&P 500 index (SPY) is up more than 15% in the same period.

Want more evidence? Along with Amazon’s unimpressive gains:

  • Meta has gained only about 2.5% in the same period,
  • Microsoft is up just 2%, and
  • Tesla is only up a little more than 4%.

Compared to Alphabet’s gains in the past year of more than 67% and Nvidia’s of 54%, these stocks look unimpressive, to say the least. Perhaps ironically, Apple has been seen as an AI laggard, yet it managed to be almost on par with S&P gains, returning 14%.

Clearly, Amazon has underperformed, but as the AI race evolves, there’s a chance it can get back to its winning ways this year thanks to its Trainium3 chips, launched in December 2025.

As a result, investors are eagerly awaiting the company’s Q4 earnings, scheduled for release on February 5. The hope is that the company will beat consensus estimates, as it did in Q3, which I discussed previously, “Bank of America resets Amazon stock price after earnings smasher.”

Let’s take a look at what’s at stake this time around, and what investors should listen for when CEO Andy Jassy shares results on Amazon’s earnings call.

Amazon’s Q4 net sales are expected to be between $206.0 billion and $213.0 billion.

Photo by Marques Thomas on Unsplash

Amazon’s Q4 2025 guidance, from its Q3 report:

  • Net sales are expected to be between $206.0 billion and $213.0 billion
  • Operating income is expected to be between $21.0 billion and $26.0 billion

Analysts reset/reiterate Amazon stock targets ahead of earnings

In a research note dated Feb. 3, BMO Capital analyst Brian Pitz reiterated an outperform (buy) rating for AMZN stock and the price target of $304.

Pitz believes Amazon’s retail sales remain healthy, but consumer confidence keeps moving in the opposite direction, indicating an unsustainable macro, according to TheFly. BMO thinks the ongoing roll-out of Same-Day buildings, with lower capital expenditures than fulfillment centers, while improving the customer experience, will unlock Retail free cash flow this year and beyond.

More AI Stocks:

  • Morgan Stanley sets jaw-dropping Micron price target after event
  • Bank of America updates Palantir stock forecast after private meeting
  • Morgan Stanley drops eye-popping Broadcom price target
  • Nvidia’s China chip problem isn’t what most investors think
  • Bank of America sets AI stocks to buy list for 2026

UBS reiterated a buy rating for Amazon stock and raised the price target to $311 from $310 on Feb. 3. The firm said that Amazon’s valuation has been rolled forward with higher AWS revenue and capital expenditure assumptions, lifting aggregate Q4 2025 to Q4 2027 capital expenditures estimates to $344 billion as AWS plans to double capacity by 2027.

In a research note dated Feb. 2, Citizens reiterated an outperform rating for Amazon stock and raised the price target from $300 to $315.

The firm noted that The Information last week reported that Anthropic increased its internal revenue projections for 2026 to at least $17 billion, which should be good for Amazon’s AWS, given that it is Anthropic’s primary compute partner.

Bank of America updates Amazon outlook ahead of earnings

Bank of America analyst Justin Post and his team updated their Amazon stock outlook ahead of earnings in a Jan. 27 research note.

Analysts estimate Amazon’s Q4 revenue and EBIT at $213 billion and $26.0 billion, respectively, which are above Wall Street’s estimates of $211 billion and $24.6 billion.

They expect 22% year-over-year AWS revenue growth as greater capacity drives incremental sales. Analysts noted that Amazon CEO Andy Jassy’s recent interview with The Information suggests demand still outstrips capacity, which is a positive for pricing.

Related: Intel CFO sends blunt $250,000 message after stock crash

Post said Q1 margins should benefit from Q4 layoffs. For Q1, the team estimates stable retail growth, while incremental capacity should support AWS acceleration. They expect Q1 Amazon revenue guidance to be in the range of $173 billion to $178 billion, and operating income in the range of $18.5 billion to $22.5 billion.

They noted that Amazon usually beats Q1 guidance, and a Q4 beat could drive upside to the Q1 ranges.

In a research note shared with me, Post reiterated a buy rating and lowered the target price from $303 to $286, due to software as a service sector multiple compression.

The target price is based on his sum-of-the-parts analysis that values AWS at 9x 2027 sales, first-party retail at 1.1x, third-party retail at 2.5x, and advertising at 5.0x. Post’s price target implies a 3.5 times blended price-to-sales ratio, 12 times 2027 EBITDA, and 31 times 2027 EPS.

Analysts noted downside risk factors for Amazon:

  • Increasing competition from offline and local retailers
  • AWS client cost optimization impact on revenues and margins
  • Regulatory pressure on the third-party marketplace

They also noted that the stock has been subject to significant volatility in the past, driven by margin trends, and that volatility could increase amid economic uncertainty.

Overall, Amazon shareholders will want to see the company overdeliver on:

  • Q4 revenue, expected by BofA to be $213 billion. Wall Street is modeling $211 billion.
  • Q4 EBIT: BofA estimate is $26. Wall Street expects $24.6.
  • Q1 revenue guidance, BofA expects in the range $173 billion to $178 billion. Wall Street is targeting $175.4 billion.

Related: Analysts reset Qualcomm stock price target ahead of earnings