Amazon Stock: Navigating Headwinds with Bullish Bets

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As the year draws to a close, Amazon finds itself at a crossroads, balancing emerging operational challenges against a notably optimistic sentiment in the financial markets. This juxtaposition of regulatory pressure and investor confidence defines the current landscape for the e-commerce and cloud giant.

Amazon's underlying business performance in 2025 provides a solid foundation. The company's third-quarter results surpassed expectations, with earnings per share reaching $1.95 against forecasts of $1.57. Revenue climbed 13.4% year-over-year to $180.17 billion.

A key driver remains Amazon Web Services (AWS). The cloud division generated approximately $33 billion in revenue for Q3 2025, fueled by massive investments in artificial intelligence infrastructure. Observers point to a "dual-engine" strategy combining cloud growth with a more efficient commerce operation. AWS has doubled its computing capacity since 2022 to meet generative AI demand, while the company is also benefiting from a record $61 billion in data center infrastructure transactions this year.

Despite these operational strengths, the stock's performance has lagged. In U.S. dollar terms, shares are up roughly 5.4% year-to-date through late December, trailing other major technology peers. This has led analysts to identify a valuation gap, suggesting a potential 28% upside over a twelve-month horizon. In euro terms, the picture is mixed: shares currently trade around €196.90, showing a nearly 9% decline over twelve months and an 8% drop since the start of the year, sitting about 15% below their 52-week high.

Operational Challenges: Zoox and Logistics

Two significant operational headwinds have emerged. The most immediate issue involves Zoox, Amazon's self-driving taxi subsidiary. The U.S. National Highway Traffic Safety Administration (NHTSA) has announced a new recall affecting 332 robotaxis due to a software malfunction. The recall follows an incident in late August where vehicles crossed yellow center lines at intersections, moving into oncoming traffic.

While Zoox emphasizes no accidents resulted from this specific defect, internal reviews identified 62 instances of unnecessary lane changes. This marks the second major recall this year, following one in May that impacted 270 vehicles. The company states the software flaw has been corrected via an over-the-air update, mitigating the technical issue but leaving reputational risk.

Concurrently, Amazon's logistics network faces potential restructuring. The United States Postal Service (USPS) plans to open its distribution centers to competing shippers via a bidding process starting in late January 2026. This move places pressure on Amazon's exclusive logistics contract with USPS, valued at around $6 billion. Amazon has stated it is evaluating alternatives and signals a intent to reduce its reliance on the postal service if terms become less favorable. This could particularly necessitate a reorganization of last-mile delivery in rural regions.

The Options Market Paints a Bullish Picture

In contrast to these challenges, sentiment in the derivatives market is strikingly positive. Trading activity on a recent session showed a clear preference for call options, especially those with strike prices of $235 and $240 and short-term expiries around December 26.

Notably, a block trade of 500 call contracts expiring in January 2026 suggests institutional investors are positioning for a rise above the $250 mark in the coming weeks. A put/call ratio of 0.72 further underscores this one-sided optimistic positioning.

This bullish outlook finds support among equity researchers. Oppenheimer maintains a price target of $305 for Amazon, significantly above current levels. Their thesis is largely built on the continued strength and growth trajectory of AWS.

Looking Ahead to 2026

The coming weeks are poised to set important directions for the stock. By the end of January, the implications of the USPS's new bidding practice on Amazon's logistics structure and cost base will become clearer. The market also awaits the Q4 earnings report, which will include crucial holiday sales figures. Management has provided revenue guidance between $206 and $213 billion for the period.

Medium-term risks persist. Beyond ongoing safety reviews for Zoox, a U.S. Federal Trade Commission (FTC) antitrust case scheduled for 2026 could bring additional regulatory pressure. From a technical analysis perspective, a sustained breakout above key resistance levels—around $236 in U.S. trading—would confirm the upward scenario currently priced into the options market. Failure to break through could see regulatory and logistical concerns regain prominence.

Key Points Summary:

• Zoox recalls 332 robotaxis following a software error; fix deployed via over-the-air update.
• USPS to open distribution centers to competitors from late January 2026, placing Amazon's ~$6 billion contract under review.
• Derivatives activity shows bullish stance with a put/call ratio of 0.72 and notable call buying for January 2026.
• Q3 2025 results: EPS of $1.95 (above expectations), revenue up 13.4% to $180.17 billion.
• AWS quarterly revenue hit $33 billion, driven by AI infrastructure investments.