Key Points
-
In Q3, Amazon’s advertising revenue grew 12%, and management expects that to continue.
-
Advertisers can utilize a combination of options in one campaign, helped by AI optimization.
-
Wall Street analysts’ average price target of $327 suggests 33% potential upside for Amazon.
-
Alphabet and Meta Platforms may dominate digital advertising, but there’s another company building an impressive advertising business. Amazon (NASDAQ: AMZN) is expanding its e-commerce ecosystem, artificial intelligence (AI) capabilities, and streaming platform, making it a top pick for investors in digital advertising right now.
In its third-quarter 2026 results on Oct. 29, Amazon reported advertising revenue growth of 12% year over year, excluding foreign exchange effects. Looking ahead, management expects advertising growth to accelerate into the high teens in the fourth quarter.
In fact, growth is becoming harder to overlook.
Amazon’s ad business is becoming a growth engine
What makes Amazon’s advertising business stand out is its direct access to shoppers who are already looking to buy something. That edge is what sets it apart from traditional digital advertising platforms.
The company has turned that advantage into a growing advertising ecosystem. For example, Sponsored Products and Sponsored Brands allow businesses to promote their offerings directly in shopping results, while display and video advertising extend their reach beyond Amazon’s marketplace.
Plus, the business is becoming increasingly sophisticated, combining shopping behavior, browsing activity, streaming engagement, and purchase information to help advertisers target consumers more effectively. With the rise of AI, Amazon’s advertising capabilities just got an upgrade.
AI is making Amazon’s ad platform more powerful
One of the biggest developments is Amazon’s push to integrate AI into its advertising process. For example, in September, the company introduced Amazon Ads Agent, an AI-powered platform designed to help advertisers plan, create, and optimize campaigns. As a result, instead of requiring advertisers to manually manage multiple campaigns and advertising formats, they can outsource much of the work to Amazon’s AI.
Today, its new Full-Funnel Campaigns feature brings sponsored ads, display advertising, video, and streaming television together in a single campaign. In other words, advertisers can simply provide their objectives, products, and creative materials, while AI handles campaign planning, execution, and optimization. This could be a game changer for smaller businesses that lack the resources and expertise to manage larger advertising campaigns.
Amazon is also using AI to simplify creative production. Its advertising tools can help businesses generate video advertisements, images, storyboards, and other marketing materials using existing product information. With that, Amazon isn’t just selling ad space. It’s also providing the technology that businesses need to advertise more efficiently.
Prime Video and live sports are extending Amazon’s ad reach
Meanwhile, Amazon is expanding its advertising footprint through its other product lines. For years, Amazon’s biggest advertising opportunity was closely tied to its e-commerce marketplace. Now, the company is going beyond that, with Prime Video being central to its new strategy.
By introducing ads to its streaming service, Amazon has created another way for brands to reach consumers beyond traditional search. Its growing sports programming also gives advertisers access to valuable audiences that are difficult to reach through traditional digital formats.
Thursday Night Football is one example. The program averaged 17.7 million viewers through the first six games of the 2026 season, marking its strongest start yet. Amazon is also expanding its NBA coverage, giving advertisers more opportunities to reach sports audiences.
But the bigger opportunity now is how Amazon connects these advertising formats. For example, a consumer might see a brand during a live sports broadcast, encounter a sponsored product while browsing Amazon, and eventually complete a purchase through the marketplace.
The company, however, still faces intense competition from other hyperscalers, especially those with massive advertising ecosystems and strong AI capabilities. Regulatory scrutiny, privacy concerns, and potential changes in consumer shopping behavior could also affect its business.
Still, Amazon offers something far bigger than traditional advertising: the ability to reach customers, influence their purchasing decisions, and measure sales within a single ecosystem. That raises the question of how much investors are paying for Amazon.
Is Amazon stock a buy at its current valuation?
At a forward price-to-earnings (P/E) ratio of just 22, Amazon is reasonably priced, especially with many Wall Street analysts rating the stock a buy. Not only that, the average price target is $327, implying a 33% upside over the next year.
These targets are possible as Amazon becomes more than an e-commerce and cloud computing giant. Its advertising business is emerging as another powerful growth engine, making it a solid investment in the next phase of digital advertising.
Should you buy stock in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $353,560!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,115,850!*
Now, it’s worth noting Stock Advisor’s total average return is 852% — a market-crushing outperformance compared to 203% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of November 6, 2026.
Rick Orford has positions in Alphabet, Amazon, and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, and Meta Platforms. The Motley Fool has a disclosure policy.
