Even though Amazon.com Inc. (NASDAQ: AMZN) posted what some investors view as a blowout quarter, its stock is up only 7% this year, despite a run-up just after earnings were announced. That gain compares to 13% for the broader market.

What’s wrong?

It is worth starting with what’s right. Amazon’s e-commerce business, which was shaky for several quarters, has made a major comeback. Revenue at its core North American business rose to $106 billion from $96 billion in the same quarter a year ago. Operating income dipped slightly to $5 billion.

Revenue in its cloud business, which is considered its growth engine, rose from $27 billion to $33 billion year over year. Operating income rose from $4 billion to $5 billion. By most outside measures, the cloud market share of AWS is number one in the world.

AWS is also likely to benefit from artificial intelligence. AI applications have been essential to clients, and Amazon needs to be competitive with Microsoft Azure and Oracle’s products. Dozens of smaller companies are niche competitors as well.

So again, what’s wrong?

One reason, although likely short-lived, is the massive outage AWS had in October. It took down the cloud capacity of well over 1,000 companies, as well as the backbones of several social media companies. It raised the issue of the vulnerability of AWS, either to internal mistakes in its architecture or outside attacks.

Yet, a temporary shutdown is not enough to keep shares of a mega-cap down.

However, Wall Street has substantial anxiety with two issues. The first is the pace at which AI will pay off. Skeptics wonder when companies can make money. Most AI use comes from free products. Industry leader OpenAI is forecast to have only $13 billion in revenue this year. It is also not expected to make money until 2030.

Then there is the balance sheet-related problem with massive AI growth plans. Amazon said it will spend $100 million on AI projects this year. If forecasts across the AI data center industry are correct, this number will rise year by year and may increase beyond that.

Amazon has a tremendous balance sheet. However, it does not have access to enough cash to build out infrastructure to the extent it will need to if it wishes to remain competitive.

If investors have one huge concern about Amazon, it is that it will need to pay massive amounts of money to be in the AI business. Where will it get that capital, and when does the investment pay off?

Amazon Stock Price Prediction and Forecast 2025–2030