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Artificial intelligence stocks have driven the 2025 stock market boom. Wall Street bulls pushed the Nasdaq and S&P 500 to new all-time highs on Friday.

Stocks are trading at records as the third-quarter earnings season for AI, big tech, and the overall stock market enters a crucial phase.

Five of the Mag 7 tech stocks—Alphabet, Amazon, Apple, Meta, and Microsoft—are set to report their Q3 earnings during the last week of October.

Today, we focus on Amazon stock, which earns a Zacks Rank #1 (Strong Buy), ahead of its Q3 earnings report on Thursday, October 30.

Investors might want to buy the Mag 7 stock and AI hyperscaler before a potential breakout.

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The Bull Case for Amazon Stock 

Amazon (AMZN - Free Report) already operates the world’s largest cloud-computing business. AWS holds roughly 30% of the global cloud infrastructure market, surpassing Microsoft’s (MSFT - Free Report)  20% and Alphabet’s 12%.

AWS has helped transform Amazon into an economic and technology giant. It also provides a strong foundation for rapid AI growth.

Amazon is among the few AI hyperscalers racing to shape the future of AI by building data centers everywhere to support the growth of large language models (LLMs) like ChatGPT and beyond. AI applications are still in their infancy overall. Many see a future where AI becomes far more advanced and integrated, transforming nearly every part of the economy.

Amazon is betting heavily on playing a major role in future AI developments, regardless of how applications evolve.

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The e-commerce leader, which controls 40% of the U.S. market, is also integrating AI into every part of its business to innovate, cut costs, and improve customer experiences.

Additionally, Amazon’s Prime business is expanding into streaming to better compete with Netflix and others. Its digital advertising segment is growing rapidly. The strength of its higher-margin AWS and ad segments, along with a focus on efficiency, is boosting Amazon’s earnings.

Post-COVID, Amazon has focused on profits amid higher interest rates. Last year, AMZN grew its GAAP earnings per share (EPS) by 91%. It’s projected to grow EPS by 24% in 2025 and 12% in FY26, reaching $7.67 per share, up from $2.90 in 2023.

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Amazon’s earnings outlook has improved since its Q2 report, with its most accurate estimates also well above consensus, earning it a Zacks Rank #1 (Strong Buy). It has beaten EPS estimates by an average of 23% over the past four quarters.

AMZN is expected to increase sales by about 11% this year and next, reaching $783 billion in 2026—an increase of $145 billion over FY24.

Buy Amazon Stock for Value, 20% Upside, and Breakout Potential  

Amazon stock has surged 2,600% over the past 15 years, outpacing Tech’s 710% and Microsoft’s 1,900%.

However, in the last five years, Amazon has underperformed the tech sector, up only 40% compared to 130% for the sector. Microsoft jumped 150% during this period. Amazon stock has climbed just 2% in 2025, while Tech surged 24%.

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It is trying to break above its 50-day moving average and the top of a trading range it’s been in since December 2024. A strong earnings report could trigger a breakout, especially since the stock is trading 20% below its average Zacks price target and 7% below its highs.

Amazon could quickly reverse its recent performance if it proves its profit growth is sustainable because its valuation is attractive. It trades at a 95% discount to its all-time highs and 55% below its 20-year median, at 29.5X forward 12-month earnings.

Despite its historic outperformance, Amazon’s forward earnings multiple is near its lowest levels since the 2008 financial crisis. It is also trading in line with Tech.

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Overall, investors might consider buying Amazon for a potential post-earnings surge and as a long-term hold for AI growth and more.

Wall Street largely agrees, with 52 of the 58 brokerage recommendations Zacks has for Amazon resting at a “Strong Buy.”

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