Historically Cheap Amazon Stock May Signal Once-in-a-Decade Buying Opportunity
Amazon's stock price is considered historically cheap, with a forward earnings multiple of 23. This valuation is more typical of mature retailers, despite Amazon Web Services (AWS) growing at an impressive 37% and having a $496 billion backlog.
The company's advertising business has also seen significant growth, reaching over $70 billion in total trailing revenue. Additionally, Amazon's chips business has exceeded a $25 billion annual run rate, growing triple digits.
According to 24/7 Wall St., the bull case for Amazon suggests that AWS operating leverage is now visible in the numbers, with margins hitting 39.4% in Q2. The majority of 2027 AI capacity is already reserved, and Andy Jassy has stated that AWS could become a trillion-dollar annual revenue business.
The bear case centers on capex, with Amazon guiding to roughly $200 billion in 2026 capital spending. However, the company's free cash flow turned negative at -$7.6 billion due to investment timing, not broken economics.