Amazon Stock Valuation Hits Decade-Low as Analysts See 27% Upside

Amazon's stock has trailed the S&P 500 for most of this year but is now in line, up 12% year-to-date. The company's valuation is at a decade-low, with its current price-to-earnings ratio at 21, lower than June's dip to 19. This low valuation is a major reason to consider buying Amazon stock.

The company has a massive $496 billion backlog of contracts and is investing in artificial intelligence infrastructure, which will help regain lost market share and meet demand. CEO Andy Jassy stated that the company projects $220 billion in capital expenditures for 2026, with still not enough capacity to meet all the demand.

Amazon's second-quarter earnings were impressive, with revenue rising 20% and operating income soaring 43%. Wall Street analysts are bullish on Amazon, with 97% rating it a buy and a median price target of $327 per share, indicating 27% upside for the stock. The Motley Fool Stock Advisor analyst team did not include Amazon in their top 10 list, but its average return is 965%, outperforming the S&P 500 by 753%.