💥 The Most Surprising Magnificent Seven Pick for 2026 Isn’t Nvidia or Apple

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Hi Fellow Investors,

Amazon (NASDAQ: AMZN) has tested investor patience recently, yet beneath the headline volatility, several long-term value drivers continue to strengthen quietly.

Being out of favor today does not eliminate Amazon’s competitive advantages, especially as the company invests aggressively for future growth cycles.

Key Points:

• Amazon’s massive AI and cloud investments have pressured near-term cash flow but position the company for long-term dominance.

• Amazon Web Services is expanding computing capacity aggressively to capture future AI-driven demand.

• Advertising has emerged as a fast-growing, high-margin profit engine that could materially boost earnings in 2026.

Why Amazon Has Fallen Behind Its Magnificent Seven Peers

Amazon’s stock has lagged in 2025 even as most Magnificent Seven peers delivered strong double-digit gains.

This underperformance stems largely from aggressive capital expenditures totaling roughly $90 billion through the first nine months of the year.

A significant portion of this spending has been directed toward AI and cloud infrastructure, pressuring free cash flow in the short term.

High investor expectations combined with limited immediate financial payoff left little tolerance for execution delays.

Despite the recent pullback, the current slowdown reflects investment timing rather than any deterioration in Amazon’s core business strength.

AWS Is Quietly Laying the Foundation for the Next Growth Cycle

Amazon Web Services remains the world’s largest cloud platform despite gradually losing market share to major competitors.

Cloud infrastructure continues to serve as the backbone for artificial intelligence training, inference, and large-scale deployment.

Over the past twelve months, Amazon has added more than 3.8 gigawatts of new computing capacity across its global footprint.

Management has outlined plans to double total capacity by 2027 to stay ahead of anticipated AI-driven demand.

Each incremental gigawatt of capacity could translate into billions of dollars in additional annual revenue as utilization ramps higher.

Advertising Is Amazon’s Underrated Profit Multiplier

AWS generates the majority of Amazon’s operating income, but advertising has emerged as an increasingly powerful secondary profit engine.

Amazon’s deep insight into consumer behavior enables advertisers to target customers with exceptional accuracy and efficiency.

Its expansive ecosystem offers multiple advertising touchpoints across shopping, streaming, gaming, and digital media platforms.

Recent partnerships extend Amazon’s advertising reach beyond its own ecosystem to platforms such as Netflix, Spotify, and SiriusXM.

Advertising revenue surged 24% year over year in the third quarter, underscoring both its scalability and attractive margin profile.

Strengths

• AWS remains the largest global cloud platform, positioning Amazon at the center of long-term AI infrastructure demand.

• Advertising delivers high-margin growth by leveraging Amazon’s unmatched consumer data and ecosystem reach.

• The company’s massive scale across commerce, cloud, and media creates diversified and resilient revenue streams.

Weaknesses

• Elevated capital spending continues to pressure free cash flow and challenge short-term investor confidence.

• Gradual AWS market share erosion has intensified concerns around competitive dynamics.

• Premium valuation levels leave the stock sensitive during periods of slower growth visibility.

Potential

• AI-driven cloud demand could unlock tens of billions in incremental AWS revenue over the next several years.

• Advertising growth may meaningfully expand operating margins and overall profitability by 2026.

• Investor sentiment could reverse sharply as heavy investments translate into tangible earnings leverage.

Conclusion

Amazon’s recent underperformance reflects short-term discomfort rather than long-term decline.

The company is investing aggressively where future demand is likely to be strongest.

For patient investors, Amazon may represent one of the most compelling Magnificent Seven opportunities heading into 2026.

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