AWS Backlog Hits Record $496 Billion: Is Amazon Stock Undervalued?

Amazon's AWS cloud computing business has a massive backlog of $496 billion, which represents nearly three years' worth of revenue at its current run rate. This is significant because it shows how high demand for cloud computing capacity is. According to CEO Andy Jassy, Amazon cannot build data centers fast enough to meet demand in 2026 and 2027, and the company is already seeing 2028 demand.

Amazon's AWS business has a profit margin far superior to its e-commerce segment, generating 60% of the company's operating income despite making up only 21% of sales. To keep up with growing demand, Amazon plans to spend $220 billion on capital expenditures this year, with nearly all going towards building out data centers.

With AWS's backlog and Amazon's aggressive spending plan, it seems like the stock is a screaming buy at current prices under $270. The company's valuation is relatively low compared to its growth prospects, making now a good time to invest in Amazon.