Subscription-based services have become a dominant force in today’s consumer economy, with companies like Netflix (NFLX) and Spotify (SPOT) leveraging recurring revenue models to drive growth and customer loyalty. But among all subscription giants, Amazon (AMZN) stands in a league of its own with its Prime, offering everything from expedited shipping and streaming to gaming and groceries, all under one roof.

Now, Amazon may be on the verge of unlocking billions in new revenue through a strategic move that it has pulled off successfully in the past. 

Analysts have zeroed in on Amazon’s Prime membership as a potential catalyst for “billions” of dollars in new revenue. For instance, JPMorgan notes that raising U.S. Prime membership costs from $139 to $159 (a $20 hike) in 2026,  following Amazon’s four-year cadence, could add roughly $3 billion in annual revenue. That’s on top of an already massive subscription base. Amazon’s subscription services segment (led by Prime) earned about $44.4 billion in 2024. With Prime members receiving $1,430 in annual value per JPMorgan’s math, analysts expect strong retention even after modest price bumps. 

About Amazon Stock

Based in Seattle, Amazon is the global e-commerce and cloud leader known for its vast online marketplace, cloud computing division (AWS), digital advertising, and subscription services like Prime. The company also develops consumer electronics, invests in artificial intelligence, and operates physical retail stores, logistics networks, and a growing media and entertainment arm.

With a hefty market cap of $2.3 trillion, shares of the e-commerce giant have traded relatively flat for much of the year. However, after bottoming out on April 21, the stock has rebounded strongly alongside the broader market, rallying over 31% since then.

Despite underperforming the broader market in recent months, Amazon continues to command a valuation premium relative to its sector peers. The stock currently trades at a forward price-earnings ratio of 35x, which is over 100% higher than the sector median of 17x, a clear signal of the market’s confidence in Amazon’s long-term growth potential and dominant market positioning. 

Amazon Beats Q1 Earnings 

Amazon posted another strong quarter this year, with Q1 results that topped expectations and highlighted the company’s growing profitability across the board. Net sales rose 9% year-over-year to $155.7 billion, just above guidance, with every major segment contributing to the growth.

North America led the charge with $92.9 billion in sales, up 8%, while international sales grew 5% to $33.5 billion. 

AWS posted $29.3 billion in revenue, up 17% from a year ago, and its operating income jumped to $11.5 billion, up from $9.4 billion, a reminder that cloud continues to be Amazon’s profit engine. Advertising was another bright spot, climbing around 18% to nearly $13.9 billion. That’s impressive growth, especially considering it's a high-margin business that’s becoming increasingly important to Amazon’s overall earnings mix.

On the profit side, operating income hit $18.4 billion overall, up 20% year-over-year, while net income surged to $17.1 billion, or $1.59 per share, well above last year’s $0.98. 

Moreover, Amazon continues to show strong operating cash generation, with $113.9 billion over the trailing 12 months, up 15%. However, heavy investment spending brought free cash flow down to $25.9 billion.

Management emphasized ongoing cost discipline, including a slowdown in warehouse expansion and tighter headcount controls, measures that seem to be paying off as profitability improves. 

Looking ahead, Amazon guided Q2 net sales in the range of $159 billion to $164 billion, which slightly beat Wall Street expectations.

What Do Analysts Say About AMZN Stock?

Wall Street analysts remain broadly bullish on Amazon, even as they weigh near‑term headwinds like macroeconomic uncertainty and a moderation in AWS growth. Among 54 analysts tracked by Barchart, the consensus rating is a “Strong Buy,” with an average price target of $244.32, implying over 11% upside from current levels.

Recently, JPMorgan’s Doug Anmuth raised his price target to $240 (from $225), citing stronger‑than‑expected Q1 results, recent tariff relief, and confidence that a modest Prime fee hike could drive $3 billion in incremental revenue.

Similarly, Morgan Stanley remains “Overweight” with a $250 target, pointing to AWS’s renewed acceleration and resilient advertising revenues as key catalysts.