Shares of Amazon (AMZN) closed at $232.14 on Tuesday, reflecting a 4% increase over the last five trading sessions. In comparison, Alphabet (GOOGL), a competitor in the Magnificent-7 stocks, ended the day at $314, rising only 2% during the same period. While GOOGL was the standout in 2025, the competition has tightened recently due to the escalating focus on artificial intelligence (AI).
This year, all companies within this elite group have significantly invested in AI, generating increased interest among investors. Despite being a solid buy throughout the year, Amazon finds itself slightly trailing Alphabet as it approaches 2026. Year-to-date, AMZN”s performance shows just a 5% gain, largely impacted by a challenging Spring season that affected many U.S. stocks.
Looking ahead, Amazon”s prospects are bolstered by its strong AI initiatives and promising growth in AWS cloud computing services. Analysts have diverse bullish forecasts for AMZN, with price targets ranging from $244 to $340, suggesting considerable upside potential from its current price. Analyst Youssef Squali from Truist Securities predicts Amazon will grow at 10.5% in 2026, a decrease from 12.1% in 2025, driven by robust growth factors and AI-driven services.
Notably, Amazon is in discussions with OpenAI, the organization behind the popular AI platform ChatGPT, regarding a potential investment of $10 billion. Should these talks culminate in an agreement, it would mark a significant advancement for Amazon”s relatively nascent semiconductor sector, particularly involving its Trainium chips.
On the other hand, Alphabet has garnered attention for its development of tensor processing units (TPUs). Experts anticipate that these specialized chips could become a crucial revenue stream for the company, potentially driving up GOOGL”s stock price. TPUs are already integral to Google Cloud, and there is a growing investor sentiment regarding the prospect of external sales.
Recent developments include Alphabet”s commitment to supplying substantial quantities of TPUs to the AI firm Anthropic, along with reports suggesting that Meta might invest billions in these chips. Although Amazon”s recent stock performance has been somewhat tepid, its AWS division experienced a 20% revenue growth last quarter and is currently facing capacity constraints.
In response, Amazon is increasing its capital expenditure budget to accommodate rising demand, positioning itself for a positive start to 2026. This strategic move could set the stage for Amazon to catch up to Alphabet in the competitive AI landscape.
