Biggest Cloud Provider Amazon’s AI Lag Makes It the Magnificent Seven’s Most Vulnerable in 2025

TradingKey - Despite remaining the leader in cloud computing, Amazon has struggled to convince investors with a clear AI growth narrative, and its dominance in the cloud may be at risk. 

A Federal Trade Commission (FTC) lawsuit accusing Amazon of misleading consumers into Prime subscriptions sent shares tumbling over 3%, leaving the stock up less than 1% year-to-date — overtaking Apple as the worst-performing tech giant in 2025.

As of September 23, Amazon’s stock has risen just 0.60% this year, making it the weakest performer among the U.S. tech "Magnificent Seven." Previously, Apple held that position, but strong demand for the iPhone 17 series has since boosted its share price.

In contrast:

• The S&P 500 is up 13%
• The Nasdaq Composite has gained 17%
• Nvidia, a primary AI beneficiary, is up 33%

Analysts say Amazon’s lackluster performance stems from slowing cloud growth and an unclear AI strategy.

In Q2, Amazon Web Services (AWS) reported revenue of $30.9 billion, ahead of Microsoft’s Intelligent Cloud ($29.9 billion) and Google Cloud ($13.6 billion). However, AWS’s year-over-year growth rate of 17.5% lagged behind:

• Microsoft Azure and other cloud services: +39%
• Google Cloud: +32%

DA Davidson noted that AWS sales were deeply disappointing, and if Microsoft continues at this pace, it could surpass Amazon by the end of next year to become the world’s largest cloud provider.

Additionally, Microsoft, which controls OpenAI, stands to benefit continuously from the AI boom. Morgan Stanley highlighted a growing Wall Street sentiment: AWS is falling behind.

eMarketer analysts pointed out that Amazon’s third-quarter operating profit guidance range — $15.5 billion to $20.5 billion — is unusually wide, reflecting caution amid rising competition in AI and other uncertainties.

MarketWatch noted that beyond weak guidance, CEO Andy Jassy failed to provide specific direction on AWS during the last earnings call, leaving investors unclear about what’s happening within the business.

Jordan Klein, analyst at Mizuho Securities, said investors are disappointed by Amazon’s lack of a clear AI roadmap.

Radio Free Mobile argued that AWS’s biggest constraints are power supply, chip availability, and shortages of key server components — bottlenecks that could take several quarters to resolve.

The firm added that accelerating AWS growth above 20% would be a crucial step in restoring investor confidence.