Economic Uncertainty Fails to Derail Digital Retail Giants Amazon and Expedia

The e-commerce sector continues to defy macroeconomic headwinds with impressive growth trajectories. Recent Commerce Department data reveals that online retail sales climbed 5.1% year-over-year in Q3 2025, substantially outpacing the 4.1% expansion in total retail sales. Digital channels now capture approximately 16.4% of all U.S. retail transactions, a share that appears destined to expand further.

Today’s consumers are orchestrating a fundamental shift in how they shop. The traditional boundary between online browsing and brick-and-mortar purchasing is dissolving. Retailers that can seamlessly operate across both channels—think Amazon’s strategic physical footprint expansion or Expedia’s digital-first travel booking platform—are positioning themselves for sustained competitive advantage in an increasingly omnichannel marketplace.

The Demographic Reshape: Why Gen-Z Is Redefining Retail

Generation Z represents a seismic force reshaping the entire e-commerce landscape. These digital natives view online shopping not as an alternative but as the default mode. They don’t just prefer convenience; they demand it. Their purchasing psychology—shaped entirely by internet abundance—drives different expectations around personalization, product discovery and payment flexibility.

Significantly, this cohort’s shopping behaviors flow through social media channels in ways previous generations never imagined. Rather than conducting independent product research, Gen-Z consumers initiate their discovery process directly within their social feeds. According to eMarketer data, 46% of Gen-Z shoppers now begin product searches on TikTok rather than Google or Amazon, reflecting a seismic shift in how retail attention is captured and converted into sales.

Technology as the Great Disruptor

AI-driven commerce is fundamentally reshaping customer engagement. Adobe Analytics data spanning 1 trillion+ visits across U.S. retail sites covering 100 million products revealed that holiday e-commerce sales increased 6.1% during the first six weeks through December 12. More tellingly, customer returns declined 2.5%, indicating consumers are making more deliberate purchasing decisions—likely aided by AI-powered recommendation engines.

The sophistication of artificial intelligence applications continues to escalate. Agentic commerce represents the frontier, where language models like ChatGPT don’t merely suggest products but actively compare features and facilitate transactions. Even consumers uncertain about their needs can articulate general intentions and complete purchases with minimal friction. Adobe projects AI-driven traffic to retail websites will surge 515-520% compared to the 2024 holiday season, with desktop referrals climbing 74.5% and mobile traffic up 25.5%.

The Social Commerce Phenomenon

Social commerce has evolved from niche trend to mainstream retail channel. This represents e-commerce reclaiming the social dimension it had eliminated—the ability to discover, research and purchase products while remaining immersed in social platforms, often mediated through influencer recommendations.

User-generated content has achieved unprecedented importance for brand building on these platforms. Influencers function as de facto storefronts, directing traffic and driving purchasing intent. The pattern originated in China and now dominates Gen-Z behavior globally. Beyond TikTok, Instagram and YouTube are refining in-app checkout capabilities, allowing customers to complete transactions without ever abandoning their feeds—dramatically reducing friction in the purchase journey.

Subscription Economics Reshape Customer Retention

The subscription model for repeat-use items has transitioned from novelty to ubiquity. This format benefits retailers through predictable recurring revenue streams and loyalty identification, while consumers appreciate automatic reordering and typical discount incentives. The expansion of “as-a-service” offerings—from tangible goods to intangible services, spanning low-value consumables to premium products—suggests this trend will accelerate substantially.

Navigating Macroeconomic Turbulence

Despite resilient e-commerce performance, underlying economic conditions warrant attention. The Federal Reserve maintained a cautious tone recently, with Powell acknowledging that while official forecasts for growth and inflation have improved, meaningful risks persist. Job market softening is evident—November saw declining job openings paired with rising unemployment. Consumer confidence dipped nearly 7 percentage points in November as shoppers expressed reluctance toward big-ticket purchases.

Yet disposable income has expanded monthly since May, creating a mixed picture. Consumers remain pessimistic about future business conditions and labor market prospects. The S&P Global inaugural holiday sales survey flagged the uncertain macroeconomic backdrop as producing a tempered growth outlook. Geopolitical volatility and persistent tariff tensions compound this uncertainty.

Industry Positioning and Valuation

The Zacks Internet-Commerce Industry carries a Rank of #79, placing it within the top 33% of 243 industries—a position indicating near-term strength. However, aggregate earnings estimates have softened: 2025 estimates declined 5.5% while 2026 estimates fell 7.1%, reflecting caution around spending sustainability.

Recent performance has lagged broader equity indices. Over the past year, e-commerce stocks collectively gained 4.2%, trailing the S&P 500’s 15.8% advance though outpacing the broader Retail and Wholesale Sector’s 3.4%. The sector currently trades at a forward P/E of 24.03X—a modest 3.1% premium to the S&P 500 but representing a slight discount to its own historical median of 24.48X.

Two Stocks Positioned for Outperformance

Expedia Group (EXPE): This Seattle-headquartered online travel platform operates through diversified segments: B2C consumer bookings, B2B corporate solutions via Expedia Partner Solutions and Egencia, plus advertising services. Recent quarters demonstrate accelerating momentum, particularly in B2B operations. Last quarter, total gross bookings expanded 12% driven by a remarkable 26% surge in B2B bookings. Similarly, 9% revenue growth was powered by 18% B2B expansion.

This strength reflects fundamental shifts in corporate travel dynamics. Businesses are investing substantially in live event attendance—seminars, conferences, workshops—recognizing the irreplaceable value of in-person engagement for relationship building and talent development. Companies simultaneously prioritize employee upskilling, recognizing the transformative impact artificial intelligence deployment will impose on workforce requirements. In-person client and partner engagement, supplemented by conference attendance and professional development, remains the gravitational center of business travel demand.

Notably, Expedia reinstated dividend payments this year after suspending distributions during the pandemic—a positive signal for income-focused investors. Analyst sentiment has turned decisively optimistic. Over the past 60 days, 2025 estimates increased 96 cents (6.8%) while 2026 estimates rose $1.54 (9.2%). These revisions translate to expected revenue growth of 6.7% and earnings expansion of 24.6% for 2025, with 2026 projecting 6.3% revenue growth and 20.8% earnings growth. Trading as a Zacks Rank #1 (Strong Buy), shares have appreciated 51.9% year-to-date.

Amazon (AMZN): This Washington-based e-commerce colossus has constructed a vertically integrated empire spanning consumer retail, grocery operations through Whole Foods Market, advertising infrastructure and dominant cloud services via Amazon Web Services. The Prime membership program serves as the strategic foundation, driving engagement across merchandise and media while generating recurring subscription revenue.

Amazon’s scale enables aggressive pricing—a competitive moat competitors struggle to match. The company’s recent FTC settlement, addressing unfair Prime enrollment and cancellation practices, resulted in $2.5 billion liability plus mandatory fair-practice compliance adjustments. However, Amazon’s announced 14,000-person workforce reduction reflects structural optimization rather than declining demand. AI-enabled efficiency gains have rendered certain management layers redundant, positioning the organization for leaner, startup-like agility despite massive operational scale.

Analyst expectations contemplate double-digit revenue and earnings expansion for 2025, with earnings growth moderating slightly in 2026. Amazon’s track record of beating estimates at double-digit rates across four consecutive quarters (averaging 22.5% outperformance) provides credibility to growth projections. For 2025, analysts forecast 11.9% revenue expansion and 29.7% earnings growth, with 2026 estimates of 11.3% revenue and 9.3% earnings growth respectively. Recent 60-day estimate revisions added 31 cents (4.5%) to 2025 projections and 18 cents (2.3%) to 2026 estimates. Shares of this Zacks Rank #2 (Buy) holding have gained 1.3% over the past twelve months.

The Takeaway

While macroeconomic uncertainty persists and consumer caution intensifies, the structural evolution toward digital retail remains inexorable. Companies successfully navigating omnichannel complexity, leveraging artificial intelligence for personalization, and capitalizing on emerging channels like social commerce are positioned to capture disproportionate value creation. Amazon and Expedia exemplify the capabilities required to thrive in this transformed landscape.