Despite the constant chorus around diversification, mega-cap stocks continue to anchor market psychology. HSBC Holdings plc (HSBC) has leaned into that reality, urging investors to remain aggressively risk-on as scale and earnings visibility continue to gain. Recently, the global banking powerhouse said it is almost at its maximum overweight in equities, while it is also overweight in high-yield credit, emerging market debt and gold.
The bank downplayed geopolitics as a secondary concern, arguing that US rates, rate volatility and near-term growth expectations remain the real drivers of the market. He also warned that S&P 500 Index ($SPX) earnings expectations for the fourth quarter are “still too low,” recommending a rotation away from rate-sensitive, high-beta sectors and back toward megacaps. This rotation puts Amazon (AMZN) firmly on center stage.
As one of the most influential hyperscalers in the market, Amazon sits at the intersection of consumer demand, cloud infrastructure, and artificial intelligence (AI). The company has even raised its 2026 capex forecast to $125 billion from $118 billion, the highest among megacaps, reflecting growing demand for AI and cloud.
Analysts now project Amazon to grow more than 17% in 2026 to more than $146 billion. For investors aligned with HSBC’s strategy, Amazon increasingly sees it as a long-term compound rather than a short-term operation.
Amazon, based in Seattle, Washington, has evolved far beyond an online retailer. With a market cap of nearly $2.6 trillion, it sells almost everything, delivers at unmatched speed, streams content, and builds devices. Behind the scenes, Amazon Web Services (AWS) powers large portions of the Internet through cloud services and artificial intelligence.
Over the past six months, the stock has gained 3.6%. In the last three months it has risen 3.9%. In the last five trading sessions alone, shares have risen another 2.14%, reflecting renewed confidence ahead of major earnings catalysts.
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As for valuation, AMZN stock is currently trading at 31.02 times forward adjusted earnings and 3.63 times sales. Both metrics sit well above industry averages, indicating a premium multiple that investors appear willing to pay for scale, growth visibility and broadening AI-powered profit pools.
Amazon shares rose more than 9.6% on Thursday, October 30, 2025, a day after the company revealed its third-quarter 2025 results that beat expectations. Revenue grew 13.4% year over year (y-o-y) to $180.17 billion, beating analyst estimates of $177.8 billion. EPS rose 36.4% from the year-ago period to $1.95, beating analyst forecasts of $1.57.
The real driver of the rise continued to be AWS. Cloud revenue accelerated 20.2% during the quarter, beating expectations of 18.1%. Operating income increased marginally year-over-year to $17.4 million, while net income advanced 38.2% to $21.2 billion.
CEO Andy Jassy underlined the shift, stating that AWS is “growing at a pace we haven’t seen since 2022,” driven by growing demand for AI. The lawsuit continues to reshape Amazon’s capital priorities and strengthens its long-term competitive positioning in enterprise and cloud services.
The strategic shift is already translating into concrete actions across Amazon’s entire AI suite. The company launched Q, an enterprise-focused chatbot, and Bedrock, a generative AI platform for cloud customers, while launching its $11 billion Project Rainier data center built exclusively to run Anthropic’s Claude models.
Looking ahead, Amazon management has guided fourth-quarter 2025 revenue between $206 billion and $213 billion, with operating income expected to range between $21 billion and $26 billion.
The e-commerce giant is scheduled to release its fourth-quarter 2025 results on Thursday, February 5, after the market closes. Analysts expect quarterly EPS growth of 6.5% year-on-year to $1.98. For full year 2025, EPS is projected to increase 29.8% to $7.18, followed by another 10% increase in fiscal 2026 to $7.90.
Wall Street’s conviction around Amazon has left little room for ambiguity. Analysts continue to rally around a bullish outlook, assigning the stock an overall rating of “Strong Buy.” Among the 57 analysts covering the stock, 50 rate it a “Strong Buy”, five suggest a “Moderate Buy” and only two recommend a “Hold”.
The average price target of $297.22 represents a potential upside of 24.3%. Meanwhile, the $360 Street high target points to a 50.5% gain from current levels, underscoring expectations that sustained earnings momentum and aggressive investing could continue to push the stock higher.
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On the date of publication, Aanchal Sugandh had no (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
