Amazon (AMZN) has recently sent a “cease and desist” letter to Perplexity, an artificial intelligence (AI) startup, over its AI-powered shopping assistant Comet. The e-commerce giant accused Comet of violating its terms of service by failing to identify itself properly. This move comes as AI shopping agents like Comet pose a threat to Amazon’s digital advertising business, which earned the company a staggering $17.7 billion in Q3 2025.
Perplexity responded to Amazon’s legal threat by calling it “aggressive” and the “first legal salvo against an AI company.” The startup believes that Amazon’s actions are a threat to all internet users, as the tech giant is more concerned with serving ads and influencing purchasing decisions rather than providing a seamless shopping experience.
The dispute between Amazon and Perplexity highlights the importance of AI agents in the e-commerce industry. During Amazon’s Q3 2025 earnings call, CEO Andy Jassy expressed optimism about the role of AI in expanding online shopping. He emphasized the need for a broad selection, great value, and reliable service to drive customer loyalty and sales.
Despite the legal battle, I believe Amazon (AMZN) stock remains a good investment opportunity. Here are a few reasons why:
1. AWS Growth: Amazon’s cloud business, AWS, reported a 20.2% year-over-year revenue growth in Q3, surpassing market expectations. The recent $38 billion cloud deal with OpenAI further validates the strength of Amazon’s cloud services.
2. Grocery Business Expansion: Amazon is expanding its grocery business to rural areas and offering faster deliveries, such as 3-hour delivery in select U.S. cities. The company’s private label grocery brand is also set to boost its food business.
3. Margin Expansion: Amazon has been focusing on margin expansion through cost-cutting measures since 2022. The operating margins expanded to 12% in the most recent quarter, showing promising growth potential.
4. AI Initiatives: Amazon is leveraging AI across its business, with platforms like Rufus driving $10 billion in incremental annualized sales. AI is also driving demand for AWS, with Q3 revenues growing at the highest pace in 11 quarters.
5. Live Video and Prime Ads: Despite the threat from third-party AI agents like Comet, Amazon’s Prime digital ad business continues to perform well. The company’s crackdown on password sharing and potential ad opportunities in live sports could further boost ad revenue.
In conclusion, Amazon’s ongoing feud with Perplexity should not overshadow the company’s strong position in the e-commerce and cloud computing markets. With a forward price-earnings (P/E) multiple of 35x, Amazon’s growth prospects make it an attractive investment option. Despite recent legal challenges, Amazon’s commitment to AI innovation and expanding business segments position it for continued success in the future.
