Here's an interesting quirk about passive investing: sometimes you can't actually escape a stock even when it's having a rough year. Amazon.com Inc. (AMZN) is learning this lesson in 2025, though from the company's perspective, it might not be such a bad thing.

Amazon shares have crawled to just a 6% gain this year while the S&P 500 has sprinted ahead with an 18% return. The reasons aren't particularly mysterious. Growth at Amazon Web Services has decelerated, Wall Street remains split on how the company will actually make money from AI, and those October layoffs didn't exactly inspire confidence. By most measures, Amazon has been a disappointment in 2025.

Yet more than 200 U.S.-listed ETFs are still holding Amazon, many with substantial allocations. This isn't because fund managers are making a bold contrarian bet. It's because the structure of passive investing means Amazon is too big and too liquid to simply rotate away from, regardless of recent performance.

Consumer ETFs Are Practically Amazon Proxies

The stickiest positions are in consumer discretionary funds. Amazon dominates e-commerce and logistics in a way that makes it essentially unavoidable for any ETF tracking U.S. retail and consumer spending. If you want exposure to American consumers opening their wallets, you're getting Amazon whether you want it or not.

The Fidelity MSCI Consumer Discretionary Index ETF (FDIS) puts almost 23% of its portfolio into Amazon. That's not a typo. Nearly a quarter of the fund rides on one stock. The State Street Consumer Discretionary Select Sector SPDR Fund (XLY) and Vanguard Consumer Discretionary Index Fund ETF (VCR) tell similar stories, each carrying Amazon at over 20% of assets.

When you hold that much of a single name, the fund's performance basically lives or dies by that stock's moves. Amazon's sluggish 2025 has acted like an anchor on these consumer ETFs, dragging down returns even when other holdings perform reasonably well.

Thematic funds push this concentration even further. The ProShares Online Retail ETF (ONLN), which bets on the ongoing shift to e-commerce, also allocates roughly 25% to Amazon. For investors in these products, Amazon's underperformance hasn't been a minor headwind. It's been the story of the year.

The Magnificent Seven Can't Shake Amazon Either

Amazon's reach extends well beyond consumer funds. Mega-cap growth ETFs and tech-focused products continue to hold Amazon as a core position, even as Nvidia and Alphabet steal most of the AI spotlight.

Take the Roundhill Magnificent Seven ETF (MAGS), which does exactly what the name suggests: it gives equal exposure to the biggest names in tech. Amazon sits right alongside its higher-flying peers. Anyone buying into the Magnificent Seven narrative is automatically making a bet on Amazon's ability to turn things around, whether they consciously intended to or not.

Broad market products like Nasdaq-100 trackers show the same pattern. Amazon remains a top holding not because fund managers are bullish, but because index rules are index rules. Market capitalization and liquidity determine the positions, and Amazon still checks both boxes in a big way.

Passive Positioning For A Comeback

What makes this situation interesting isn't that ETFs are loading up on Amazon during its rough patch. They're not. What's notable is that they haven't meaningfully reduced exposure despite the stock's clear underperformance. Rules-based funds don't make emotional decisions. They follow their methodology, and as long as Amazon remains one of the largest, most liquid companies in the world, it stays in the portfolio.

This mechanical persistence might actually matter as we look toward 2026. Analysts at Evercore ISI and JPMorgan see potential upside of 30% to 50% if Amazon can deliver on a few key fronts: renewed growth at AWS, increased demand for AI infrastructure, stronger advertising revenue, and improving free cash flow.

For the millions of investors holding these ETFs, the implication is straightforward. You might not think you're making a concentrated bet on Amazon, but if you own consumer discretionary funds or mega-cap tech products, you absolutely are. And if the analysts are right about a 2026 recovery, those ETFs won't need to chase the rebound. They'll already be positioned for it, having held through the entire downturn not out of conviction, but out of structure.

Sometimes the most interesting investment decisions are the ones that never get made at all.