Amazon Stock Plunges to Decade-Low Valuation as Earnings Soar

Amazon's stock has underperformed the S&P 500 so far in 2026, but a key reason to buy now is its low valuation. The company's price-to-earnings ratio is currently at 21, which is one of the lowest levels in at least 10 years. This is significant because Amazon is not only a leader in e-commerce but also in cloud computing.

One of the main concerns about Amazon was its massive spending on artificial intelligence, with a proposed $200 billion in capital expenditures to meet demand from its growing backlog of $496 billion in contracts. However, analysts are bullish on the company's investments, which may already be paying off as Amazon reported blowout second-quarter earnings.

The company's cloud computing business, AWS, had its fastest growth in more than four years with revenue rising 37%, while overall revenue increased 20%. Operating income soared 43% to $27.5 billion while net income increased 243% to $62.6 billion.