Shares of Amazon (AMZN) fell by nearly 2% on Tuesday as reports emerged that early sales for its flagship shopping event “Prime Day” were down 14% on a yearly basis. 

There are two important things for investors to note here. First, this early data only covers the first four hours of the first day of the four-day event, and customers may be waiting for bigger discounts in the subsequent days. Second, the event is yet to commence in India, a key market for the company.

But investors were already treating Amazon with skepticism. The stock is up just 2.2% in the year to date, underperforming the broader market and trading at a significant discount to its five-year average valuation. 

For long-term investors, this temporary downturn can be a “prime” opportunity to add AMZN stock to their portfolios. Let’s find out why. 

Strong Balance Sheet, Consistent Outperformance

It is worth noting that Amazon is one of the most valuable companies in the world, commanding a market cap of $2.33 trillion. A significant contributor to this has been the company’s growth in revenue and earnings, especially over the past five years. During this period, Amazon reported revenue and earnings compound annual growth rates (CAGRs) of 17% and 44%, respectively.

In the most recent quarter, Amazon reported a beat on both revenue and earnings. 

The company reported total net sales of $155.7 billion in the quarter, up 9% from the previous year. While the North American segment contributed the bulk of the overall sales at $92.9 billion, the high-margin cloud segment of Amazon Web Services (AWS) witnessed not just a yearly rise in revenues, but it increased its contribution to the overall sales to 18.8% from just 6.6% in the year-ago period. AWS net sales for the quarter were at $29.3 billion, which denoted a rise of 17% from the prior year.

Although the net cash from operating activities declined in Q1 2025, it remained at a healthy $17 billion (vs. $19 billion in the prior year). Overall, Amazon closed the quarter with a cash and equivalents balance of $94.6 billion, above its long-term debt levels of about $80 billion.

For Q2 2025, the company expects revenue to be between $159 billion and $164 billion, the midpoint of which would denote yearly growth of 9.1%.

AWS, AI and More

Amazon’s solid financial standing is a function of the company’s dominant position in the global cloud market and its silent but proactive moves to implement AI across various divisions.

Amazon Web Services is still at the top of the global cloud infrastructure market with a 30% market share. With an average contract duration of 4.1 years, its order backlog has increased to $189 billion, representing a 20% yearly increase. This long-term nature of client commitments should provide stability. 

Amazon has also been increasing its investment in AI inference. The company is positioning itself as a cost-performance leader in this market by implementing Trainium 2 inference-specific chips and broadening its model offerings to include DeepSeek's R1, Meta’s Llama 4, and Claude 3.7 Sonnet. Such infrastructure advantages are likely to compound as inference demand scales and enterprises seek alternatives to expensive, high-powered GPU stacks for real-time AI applications.

Then, by investing in robotics and human-operated logistics capacity, Amazon is working to increase the efficiency of its e-commerce operations. Its fulfillment centers are already implementing AI and automation tools, and as physical AI becomes more popular, this could become a significant growth engine for its online retail division. Encouragingly, Amazon has been able to lower delivery costs and expand the reach of its same-day delivery service by implementing strategic changes like redesigning its inbound logistics architecture, implementing regional fulfillment models, reorganizing its internal network, and entering underserved rural areas.

Regarding robotics, Amazon’s fulfillment operations currently use a variety of specialized machines. These include Hercules for lifting and carrying heavy items, Proteus for autonomous navigation, Sparrow for visual recognition and picking tasks, Cardinal and Robin for sorting and packaging, Vulcan for tactile-sensitive movement, and Sequoia for high-efficiency storage systems. Additionally, the company’s proprietary DeepFleet AI system has recently improved robotic efficiency by roughly 10% across its logistics ecosystem.

Last but not least, Amazon is subtly growing into a significant player in digital advertising. According to projections, its ads business will bring in $60 billion in 2025 and possibly over $70 billion the year after. Amazon is in a unique position among tech companies because it has access to valuable ad inventory across platforms like Prime Video, Fire TV, and Twitch. It offers advertisers seeking accuracy and performance an unrivaled value proposition thanks to its closed-loop ecosystem, which gives it complete control over the advertising chain, from placements and impressions to consumer behavior and conversions.

Analyst Opinions on AMZN Stock 

Analysts given AMZN a consensus “Strong Buy” rating with a mean target price of $244.96. This denotes an upside potential of about 10.5% from current levels. Out of 54 analysts covering the stock, 47 have a “Strong Buy” rating, six have a “Moderate Buy” rating, and one has a “Hold” rating.