Amazon's Stock Lags Despite Robust Earnings and AWS Growth

Amazon's stock has been struggling despite its strong earnings and AWS growth. In Q2 2026, the company reported revenue of $200.6 billion, a 20% year-over-year increase. AWS grew 37%, reaching a $169 billion annualized run rate with a 39.4% operating margin.

However, Amazon's heavy capital expenditures have weighed on its free cash flow, pushing it into negative territory at -$7.6 billion. This has caused concern among institutional investors, who are worried about how the company will absorb depreciation charges from its spending.

The stock is currently trading near its 200-day simple moving average (SMA) of $248.68, a critical technical level that could determine whether Amazon's next move is a mean-reversion bounce or a slide towards $240. The momentum indicators are also painting a cautious picture, with the MACD histogram flattened at zero and both the MACD line and signal line converged around -2.30.

Valuation-wise, Amazon trades at levels that look historically compressed for the company. With a trailing price-to-earnings ratio of around 20x, it's significantly lower than its 10-year average trailing multiple of over 90x. Analysts remain constructive on the stock, with an average price target in the $328-$329 range, implying upside of about 32% from the current price.