AI Research
3 Reasons to Hold AMZN Stock as AWS & AI Drive 31% Growth in 3 Months
AmazonAMZN has demonstrated remarkable resilience and growth potential, surging 30.9% over the past three months, outperforming the broader Zacks Retail-Wholesale sector and the S&P 500’s return of 21.4% and 26%, respectively.
Combined, AWS, MicrosoftMSFT Azure and AlphabetGOOGL-owned Google Cloud achieved a 63% share of total enterprise spending on cloud infrastructure services during the first quarter of 2025. AWS ranked No. 1 in market share by winning 29.1% share of the market, followed by Microsoft’s 40.7% and Google’s 24.1%. China’s largest and most dominant cloud company, Alibaba BABA, achieved 9.4% global cloud market share.
Investors have recognized the transformative power of Amazon’s cloud computing and artificial intelligence (AI) initiatives in driving future growth.
3-Month Performance
Image Source: Zacks Investment Research
AWS Revenue Growth Maintains Strong Momentum
AWS continues to serve as the company’s primary profit engine, generating $29.3 billion in first-quarter revenues with impressive 16.9% year-over-year growth. This performance translates to an annualized run rate of $117 billion, cementing AWS’ position as the dominant force in enterprise cloud computing. The segment’s operating margins expanded to 39.5%, demonstrating exceptional scalability and pricing power as organizations accelerate their digital transformation initiatives.
AWS also maintains a substantial backlog of $189 billion with a 4.1-year weighted average life, providing unprecedented revenue visibility and supporting long-term growth projections. This committed pipeline reflects enterprise customers’ confidence in AWS’ capabilities and suggests sustained demand for cloud services throughout 2025 and beyond. Recent customer acquisitions spanning diverse industries, including Adobe, Uber, and Nasdaq, demonstrate AWS’ ability to capture market share across various sectors while expanding its total addressable market.
Management has indicated that supply constraints currently limit AWS’ ability to capture additional AI-driven demand, suggesting that faster capacity deployment could drive even higher revenue growth rates. This bottleneck represents both a near-term challenge and a significant opportunity, as infrastructure expansion throughout 2025 could unlock accelerated performance in subsequent quarters.
AI Innovation Positions Amazon for Future Dominance
Amazon’s AI business has achieved a multi-billion-dollar annual run rate with triple-digit growth rates, positioning Amazon advantageously in the generative AI transformation sweeping through enterprise technology.
Recent AWS developments demonstrate the company’s commitment to AI leadership. The introduction of Amazon Nova Canvas with AI-powered image generation capabilities, the availability of Anthropic Claude 4 models, including Opus 4 and Sonnet 4 through Amazon Bedrock, and the launch of DeepSeek-R1 models showcase Amazon’s ability to integrate cutting-edge AI technologies into its platform. These innovations provide customers with comprehensive AI solutions while creating additional revenue streams for Amazon.
Project Rainier represents Amazon’s ambitious infrastructure investment in AI compute capabilities, designed to train next-generation AI models through powerful Trainium2 chip clusters. This initiative demonstrates Amazon’s willingness to invest heavily in foundational AI infrastructure, potentially creating significant barriers to entry for competitors while establishing AWS as the preferred platform for AI workload deployment.
The enhanced Amazon Q Developer experience, now featuring cost optimization capabilities and Claude Sonnet 4 integration within the CLI, illustrates how Amazon leverages AI to improve customer productivity while driving platform adoption. These developments suggest that AI will continue serving as both a direct revenue generator and a catalyst for broader AWS growth.
Strong Financial Performance Supports Investment Thesis
Amazon’s first-quarter financial results demonstrate the company’s operational efficiency and margin expansion capabilities. Net income increased 64.4% year over year to $17.1 billion, while operating income rose 20.2% to $18.4 billion, representing 11.8% of revenues compared to 10.7% in the prior year. This margin expansion across a $155.7 billion revenue base reflects management’s ability to scale operations effectively while maintaining growth momentum.
The company’s balance sheet remains robust with $66.2 billion in cash and equivalents, providing substantial financial flexibility for continued AI infrastructure investments and strategic initiatives. Operating cash flow of $113.9 billion for the trailing 12 months, despite a decline in free cash flow to $25.9 billion, reflects the capital-intensive nature of Amazon’s current growth investments.
The Zacks Consensus Estimate for 2025 net sales is pegged at $694.49 billion, indicating growth of 8.86% from the prior-year reported figure. The Zacks Consensus Estimate for 2025 earnings is pegged at $6.22 per share, which indicates a jump of 0.5% from the year-ago period.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
However, new investors should exercise patience given Amazon’s forward 12-month price-to-sales ratio of 3.25X, significantly above the Zacks Internet – Commerce industry average of 2.17X. This valuation premium suggests the stock may be fully valued at current levels, warranting a more strategic entry point during potential market corrections or company-specific volatility.
AMZN’s P/S F12M Ratio Depicts Premium Valuation
Image Source: Zacks Investment Research
Investment Recommendation
Current Amazon shareholders should maintain their positions as AWS and AI initiatives drive fundamental business transformation. The combination of sustained cloud growth, expanding AI capabilities, and improving operational efficiency supports the stock’s recent 30.9% appreciation while indicating continued upside potential throughout 2025. AMZN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
Microsoft has added OpenAI-developed Deep Research capability to its Azure AI Foundry Agent service to help enterprises integrate research automation into their business applications.
The integration of research automation is made possible by Deep Research API and SDK, which can be used by developers to embed, extend, and orchestrate Deep Research-as-a-service across an enterprise’s ecosystem, including data and existing systems, Yina Arenas, VP of product at Microsoft’s Core AI division, wrote in a blog post.
Developers can use Deep Research to automate large-scale, source-traceable insights, programmatically build and deploy agents as services invokable by apps, workflows, or other agents, and orchestrate complex tasks using Logic Apps, Azure Functions, and Foundry connectors, Arenas added.
AI Research
On-demand webinar: Artificial intelligence – Next gen tech, next gen risks? : Clyde & Co
Artificial intelligence is an umbrella term for technologies that simulate human intelligence. It is one of the greatest sources of systemic risk that insurers now face. It acts as a multiplier of existing exposures and a source of new liabilities, with the potential to cause catastrophic mass loss events.
In this webinar, we delve into the systemic risks of artificial intelligence, including privacy, security, and legal challenges that insurers must navigate.
Our speakers were joined by Dr. Matthew Bonner, Senior Fire Engineer and Research Lead at Trigon Fire Safety, and Rishi Baviskar, Cyber Risk Consultant at Allianz, for a discussion on the systemic risks of artificial intelligence – including privacy, security, and legal challenges that insurers must navigate.
Key topics include:
- Privacy violations
- Security threats, weaponisation and adversarial manipulation
- The threat of ‘uncontrollable AI’
- Sentient AI and the concept of legal personality
- And more!
Australian scientists have successfully developed a research system that uses ‘biological artificial intelligence’ to design and evolve molecules with new or improved functions directly in mammal cells. The researchers said this system provides a powerful new tool that will help scientists develop more specific and effective research tools or gene therapies.
Named PROTEUS (PROTein Evolution Using Selection) the system harnesses ‘directed evolution’, a lab technique that mimics the natural power of evolution. However, rather than taking years or decades, this method accelerates cycles of evolution and natural selection, allowing them to create molecules with new functions in weeks.
This could have a direct impact on finding new, more effective medicines. For example, this system can be applied to improve gene editing technology like CRISPR to improve its effectiveness.
“This means PROTEUS can be used to generate new molecules that are highly tuned to function in our bodies, and we can use it to make new medicine that would be otherwise difficult or impossible to make with current technologies.” says co-senior author Professor Greg Neely, Head of the Dr. John and Anne Chong Lab for Functional Genomics at the University of Sydney.
“What is new about our work is that directed evolution primarily work in bacterial cells, whereas PROTEUS can evolve molecules in mammal cells.”
PROTEUS can be given a problem with uncertain solution like when a user feeds in prompts for an artificial intelligence platform. For example the problem can be how to efficiently turn off a human disease gene inside our body.
PROTEUS then uses directed evolution to explore millions of possible sequences that have yet to exist naturally and finds molecules with properties that are highly adapted to solve the problem. This means PROTEUS can help find a solution that would normally take a human researcher years to solve if at all.
The researchers reported they used PROTEUS to develop improved versions of proteins that can be more easily regulated by drugs, and nanobodies (mini versions of antibodies) that can detect DNA damage, an important process that drives cancer. However, they said PROTEUS isn’t limited to this and can be used to enhance the function of most proteins and molecules.
The findings were reported in Nature Communications, with the research performed at the Charles Perkins Centre, the University of Sydney with collaborators from the Centenary Institute.
Unlocking molecular machine learning
The original development of directed evolution, performed first in bacteria, was recognized by the 2018 Noble Prize in Chemistry.
“The invention of directed evolution changed the trajectory of biochemistry. Now, with PROTEUS, we can program a mammalian cell with a genetic problem we aren’t sure how to solve. Letting our system run continuously means we can check in regularly to understand just how the system is solving our genetic challenge,” said lead researcher Dr. Christopher Denes from the Charles Perkins Centre and School of Life and Environmental Sciences
The biggest challenge Dr. Denes and the team faced was how to make sure the mammalian cell could withstand the multiple cycles of evolution and mutations and remain stable, without the system “cheating” and coming up with a trivial solution that doesn’t answer the intended question.
They found the key was using chimeric virus-like particles, a design consisting of taking the outside shell of one virus and combining it with the genes of another virus, which blocked the system from cheating.
The design used parts of two significantly different virus families creating the best of both worlds. The resulting system allowed the cells to process many different possible solutions in parallel, with improved solutions winning and becoming more dominant while incorrect solutions instead disappear.
“PROTEUS is stable, robust and has been validated by independent labs. We welcome other labs to adopt this technique. By applying PROTEUS, we hope to empower the development of a new generation of enzymes, molecular tools and therapeutics,” Dr. Denes said.
“We made this system open source for the research community, and we are excited to see what people use it for, our goals will be to enhance gene-editing technologies, or to fine tune mRNA medicines for more potent and specific effects,” Professor Neely said.
More information:
Alexander J. Cole et al, A chimeric viral platform for directed evolution in mammalian cells, Nature Communications (2025). DOI: 10.1038/s41467-025-59438-2
Citation:
Scientists create biological ‘artificial intelligence’ system (2025, July 8)
retrieved 8 July 2025
from https://medicalxpress.com/news/2025-07-scientists-biological-artificial-intelligence.html
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