Amazon Stock Valuation Plunges Amid Record-Breaking Capex Spending

Amazon's stock has been on a steady rise this year, mirroring the performance of the S&P 500. However, despite its positive outlook, Amazon is trading at one of its lowest price-to-earnings ratios ever, at around 21 times trailing-12-month earnings.

The market's low valuation of Amazon can be attributed to the company's increasing capital expenditures (capex), which have sent its free cash flow into negative territory. In 2026, Amazon expects to spend a staggering $220 billion on capex alone.

CEO Andy Jassy believes that Amazon Web Services (AWS) will become a trillion-dollar business in the long run, but for now, the company's high spending is causing concern among investors. As a result, Amazon's stock may not see significant growth until it can demonstrate reliable positive free cash flow.