Amazon Stock Undervalued at 21 PE Ratio Amid $496 Billion Backlog

Amazon's stock has been lagging behind the S&P 500 for most of 2026, but one major reason investors should consider buying now is its low valuation. The company's price-to-earnings (P/E) ratio is currently at 21, which is one of the lowest in at least 10 years.

Amazon has a massive backlog of $496 billion in contracts and has been investing heavily in artificial intelligence infrastructure. CEO Andy Jassy stated that even with increased capex spending, the company will still not have enough capacity to meet all demand in 2026 and 2027.

The recent second-quarter earnings report showed impressive growth for Amazon Web Services (AWS) with revenue rising 37%, while overall revenue increased 20%. Operating income soared 43% to $27.5 billion, and net income increased 243% to $62.6 billion.