Amazon’s AI Ambitions Intensify Amid Strategic Overhaul and Potential OpenAI Stake

Amazon is undertaking a significant strategic pivot, centralizing its artificial intelligence operations under a new, unified division. This move, described as one of the most substantial organizational shifts in recent years, comes alongside reports of potential multibillion-dollar discussions with OpenAI. As the company aggressively expands its AI commitments while its share price lags the broader market, investors are questioning whether this marks a pivotal moment for the e-commerce and cloud giant.

Despite robust operational results, Amazon's equity performance has been a point of concern. Year-to-date, the stock has gained approximately 3.6%, significantly trailing the double-digit advance of the S&P 500 index. Over a twelve-month period, the increase is a modest 1.82%.

This disconnect persists even after a strong third-quarter 2025 report. The company surpassed expectations with revenue climbing 13% to $180.2 billion. Its cloud division, Amazon Web Services (AWS), accelerated to 20% growth, reaching $33 billion—its fastest pace in several quarters. Net income stood at $21.2 billion, or $1.95 per share.

Investor apprehension primarily centers on AWS's growth rate relative to competitors Microsoft Azure and Google Cloud. Furthermore, substantial capital expenditures for AI infrastructure and data centers are pressuring margins in the near term. Amazon's forward price-to-earnings ratio is 31.7, representing a premium to the industry average but sitting below the company's own historical norm.

Veteran Executive to Helm Consolidated AI Unit

To streamline its AI efforts, CEO Andy Jassy has appointed a 27-year company veteran to lead the newly formed central AI organization. Peter DeSantis, a Senior Vice President instrumental in building AWS, will oversee the consolidation of several previously separate teams:

• The AGI Team, responsible for developing the Nova AI models
• Alexa AI, the core technology behind the voice assistant
• Chip development, including the Trainium and Inferentia processors designed for AI workloads
• Quantum computing research

This consolidation of expertise signals Amazon's intent to shorten development cycles and bring competitive AI products to market more rapidly.

Should investors sell immediately? Or is it worth buying Amazon?

Strategic Moves: From Anthropic to OpenAI Talks

Amazon's AI strategy appears multifaceted. The company has already committed $8 billion to Anthropic, a direct competitor to OpenAI. Concurrently, reports suggest Amazon is in talks regarding a roughly $10 billion investment in OpenAI itself. Such a deal would value the creator of ChatGPT at over $500 billion and reportedly include a commitment for OpenAI to utilize Amazon's proprietary AI chips.

Holding stakes in two leading AI firms would grant Amazon a unique market position. The potential OpenAI investment follows that company's signing last month of a $38 billion contract for AWS cloud capacity.

At the recent AWS re:Invent conference, Amazon showcased its latest AI hardware and software, including new Trainium-3 servers, enhanced Nova models with advanced AI agent capabilities, and the AgentCore and QuickSuite platforms for enterprise clients.

Analyst Consensus Points to Substantial Upside

The analyst community remains broadly bullish on Amazon's prospects. Of 56 analysts covering the stock, 49 recommend a "Buy," five suggest a "Moderate Buy," and only two advise "Hold." The average price target is $295.80, implying nearly 30% upside from current levels.

Recent commentary has been positive:
- BMO Capital Markets raised its target to $304, citing stronger cloud demand.
- TD Cowen reaffirmed its $300 target following the re:Invent conference, highlighting the strength of the AI product portfolio.
- The most optimistic price target on the street is $360, suggesting potential gains exceeding 58%.