Over the past decade, consumer electronics divisions at major tech firms have driven growth, with hits like Apple’s (AAPL) AirPods fueling shareholder gains while flops left others scrambling.

Following in those footsteps, Amazon (AMZN) is stepping up its game by forming a new group called ZeroOne. The team’s mission is to take ideas from “zero to one” and launch entirely new product categories. ZeroOne is led by J Allard, the former Microsoft (MSFT) veteran who co-created the Xbox console. Job listings hint at projects ranging from smart-home computer vision to AI-powered wearables.

This push comes after Amazon’s mixed track record in devices. While the Kindle and Echo were major successes, products like the Fire Phone and Halo fitness tracker failed to gain traction. Recruiting Allard signals a bold bet on breakthrough innovation to reinvigorate the company’s hardware ambitions.

Amazon’s top-line momentum is being fueled by its high-margin advertising arm, and the launch of ZeroOne offers potential new catalysts if it yields breakout products.

About Amazon Stock

Based in Seattle, Amazon is a global e-commerce leader, offering everything from everyday essentials to fresh groceries through its vast online marketplace and Prime subscription services. Its Amazon Web Services (AWS) division powers businesses worldwide with scalable cloud computing, storage, and AI tools. Beyond retail and cloud, Amazon generates high-margin revenue from its advertising platform and digital content, streaming video, music, and ebooks. The company is also expanding in logistics, robotics, and emerging technologies to drive efficiency and support future growth.

Valued at approximately $2.2 trillion, Amazon shares have rallied 12% over the past 52 weeks, yet are down nearly 7% year-to-date amid fears over tariffs. Despite underperforming this year, Amazon shares still trade at a premium multiple of 33x forward earnings, significantly higher than the industry average of 16x. However, these multiples are well below its own historical average of 70x.

AI-Powered Cloud Services

Artificial intelligence is playing a key role in driving AWS’s expansion. Amazon clients leverage tools like SageMaker to train and run models on Amazon’s servers instead of purchasing costly hardware. As the global cloud computing market leaps from $750 billion in 2024 to nearly $2.9 trillion by 2030, AWS stands to capitalize on a projected 20% expansion driven by AI demand.

Furthermore, AI is transforming Amazon’s operations. The company deploys machine learning to optimize warehouse robotics, cut labor costs and speed order fulfillment. It enhances product recommendations, refines Alexa’s voice responses, and improves demand forecasting. These AI applications boost efficiency, customer satisfaction and profitability across Amazon’s vast e-commerce and services ecosystem.

Amazon Delivered Strong Q1 Earnings

Amazon’s recent earnings beat, helped by temporarily easing tariff pressures, has lifted investor sentiment. On May 1, the e-commerce giant reported Q1 revenue of $155.7 billion, up 9% year-over-year and $546 million above guidance.
Despite Online Stores being Amazon’s largest segment, it grew just 5% to $57.4 billion and carries razor-thin margins. Nevertheless, companywide operating income jumped 20%, underscoring how its cloud and ad businesses are increasingly shouldering the profit load.

Logistics efficiencies also played a key role. Shipping costs rose only 3% year-over-year against an 8% increase in paid units, a notable five-point gap compared to last year. Internal documents point to warehouse robotics flattening Amazon’s hiring curve, further trimming labor expenses.

Meanwhile, AWS once again led the way, posting 17% revenue growth on a $120 billion annual run rate and expanding operating margins to 39%. These results highlight AWS’s role as the company’s primary profit engine.

On an adjusted basis, Amazon reported earnings of $1.59 per share, surpassing estimates by $0.24. 

Looking ahead, management sees up to 11% year-over-year revenue growth in Q2. While tariff jitters could temper top-line upside, the 11.8% operating margin achieved in Q1 suggests Amazon is well-positioned to exceed profitability expectations once again.

What Do Analysts Think About Amazon Stock?

Analysts remain bullish on Amazon after its Q1 earnings. Wedbush raised its price target from $225 to $235 early in May, citing “multiple levers of sustainable margin improvement.” 

Similarly, JPMorgan boosted its price target from $220 to $225, noting that AWS is bringing on more capacity and that incremental supply is being consumed quickly. 

Overall, Amazon carries a consensus “Strong Buy” rating from Wall Street analysts, with a mean price target of $240.69 implying 17% upside from current levels.