Amazon's Strong Moat and Accelerating Cloud Business Drive Undervaluation

Amazon's financials remain strong due to its expanding competitive moat and accelerating cloud business. The company's AWS division reported a 36.7% year-over-year revenue growth, accounting for 60.5% of Amazon's EBIT and 21.1% of its revenue. Management highlighted server and network payback periods of less than three years.

AWS also secured multi-year AI contracts, supporting robust future free cash flow. The updated valuation model suggests Amazon shares are 65% undervalued, with a price target of $423 per share over the next 12-24 months under constructive assumptions.