Amazon Ads Benefits From AI Shopping: Can Growth Stay Strong?

Amazon AMZN is strengthening its advertising business as AI-driven shopping reshapes product discovery, creating a stronger channel for brands. Amazon Ads generated $19.8 billion in revenues in the second quarter of 2026, up 26% year over year, highlighting advertising’s growing contribution.

Alexa for Shopping is becoming an important catalyst. The agentic shopping experience combines personalized recommendations, product comparisons, price history tracking and automated purchasing, creating additional touchpoints for sponsored placements within conversational commerce.

The effectiveness of these placements appears to support advertiser adoption. During the second quarter, shoppers who clicked a sponsored prompt converted to a sale 48% more often and spent 21% more on average than those who did not. Amazon’s AI-powered Ads Agent also reduced cost per impression by 8% and cost per acquisition by 6%. Expansion into 11 additional countries is expected to broaden its reach as advertisers increasingly adopt AI-led campaign management and targeting tools.

As shoppers increasingly use conversational tools to compare products and complete purchases, advertising could become more closely integrated with the decision-making process. This should strengthen relevance and potentially improve advertiser returns.

With AI shopping gaining traction, Amazon Ads is well- positioned to sustain strong growth as conversational experiences create new opportunities for sponsored product discovery. Higher conversion rates from sponsored prompts, stronger advertiser efficiency and the expanding use of AI-powered shopping tools could support continued ad spending. As Amazon deepens the integration of advertising into AI-led shopping journeys, these developments should help keep Amazon Ads growth strong.

How AMZN Is Placed Against Peers

Amazon's AI- driven advertising push places it alongside Alphabet GOOGL and Meta Platforms META as major players integrating AI into ad targeting and product discovery. Alphabet continues leveraging AI within Google Search and Shopping to enhance ad relevance, while Meta Platforms applies AI across its Advantage+ suite to improve campaign automation and conversion outcomes. Amazon differentiates through its agentic shopping layer, embedding sponsored discovery directly into conversational commerce via Alexa for Shopping, an approach less central to Alphabet and Meta's advertising models. As AI reshapes digital advertising broadly, Amazon Ads growth alongside Alphabet and Meta reflects a sector-wide shift toward AI-powered monetization strategies.

AMZN’s Share Price Performance, Valuation & Estimates

Amazon shares have returned 13.2% in the year- to- date period against compared with the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s appreciation of 6.9% and 4.7%, respectively.

AMZN’s Price Performance

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From a valuation standpoint, AMZN stock appears overvalued, trading at a forward 12-month price/earnings ratio of 22.74X, higher than the industry’s 22.21X. Amazon has a Value Score of D.

AMZN’s Valuation

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The Zacks Consensus Estimate for AMZN’s 2026 earnings is pegged at $13.06 per share, indicating an 82.15% increase from the figure reported in the year-ago quarter.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Amazon currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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