Amazon’s Growth Strategy: Positioning for AI and Quantum Computing Success

The S&P 500 (SNPINDEX: ^GSPC) confirmed its status as a bull market last year, registering a significant 23% gain, and has tacked on over 3% in 2025 so far. Investors are increasingly drawn to growth stocks, particularly in transformative sectors like artificial intelligence (AI) and quantum computing, as these technologies begin their upward trajectories. The current $200 billion AI market could potentially exceed $1 trillion by decade’s end, while quantum computing is forecasted to grow from about $1 billion to over $5 billion, according to Markets and Markets data.

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Among the beneficiaries of this trend is Amazon (NASDAQ: AMZN), a frontrunner in both e-commerce and cloud computing, and well-positioned for advancements in AI and quantum computing. Amazon has established a strong track record of earnings, leading to three compelling reasons to consider this stock.

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1. Amazon’s Cost Structure Improvements are Paying Off

In recent years, inflation challenged Amazon, impacting its cost structure and limiting consumer spending. However, the company seized this phase as an opportunity to refine its costs, which involved job cuts and optimizing their fulfillment network for greater efficiency.

This strategic shift enabled Amazon to rebound from its first annual loss in a decade to profitability within a year, reaching positive earnings again in 2023. Continuing improvements in its cost structure promise further financial gains.

A key strategy has been transitioning to a regional fulfillment model in the U.S., making it possible to keep inventory closer to customers. This has led to reduced service costs, enabling Amazon to maintain competitive pricing. A recent earnings call highlighted ongoing initiatives that will result in further savings in the long term.

2. AI Initiatives are Driving Revenue Growth

Amazon has made substantial investments in AI within both its e-commerce and cloud operations. In e-commerce, AI tools enhance efficiency by optimizing delivery routes and streamlining interactions on its platform. In the realm of Amazon Web Services (AWS), these efforts have already translated into revenue growth.

From the outset, AWS committed to becoming integral to every segment of AI development—from selling a range of AI chips to providing fully managed services for customers to customize large language models. This dedication has contributed to AWS achieving an annual revenue run rate of $110 billion.

The revenue benefits from AI usage already reflect a high-growth trajectory for Amazon, signaling the continued impact of its investments in this field.

3. The Future of AI and Quantum Computing Holds Tremendous Potential

The potential for AI growth remains substantial as it evolves. Initial phases have focused on infrastructure, but we are now entering a time where AI is applied practically in real-world scenarios, often via AI agents.

Amazon’s Project Amelia, an AI assistant for sellers on its platform, exemplifies the company’s forward-thinking approach in this area. Additionally, AWS offers frameworks for clients to develop tailored AI agents, enhancing their operations.

Furthermore, AWS provides access to various quantum computing services, enabling customers to advance their research and connect with specialized hardware from companies like Rigetti Computing.

As AWS stands as the world’s leading cloud service provider, it is ideally positioned to capitalize on the influx of investments in AI and quantum computing. This trend could significantly boost Amazon’s revenue and stock value in upcoming quarters.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.