Amazon's shares fell roughly 50% after its 2022 loss, its first unprofitable year since 2014, but recovered as AWS growth accelerated. AWS revenue rose 36.7% to $42.2 billion in Q2 2026, while advertising reached $19.8 billion, up 26%. A $1,000 investment made 10 years ago would now be worth $5,966 (a 496.6% total return), ahead of the S&P 500's 254.56%. Over five years, the same investment returned 49.9%, trailing the index's 68.15%. The author leans bullish but watches spending, noting about $220 billion in expected 2026 cash capex, trailing free cash flow of -$7.6 billion and a P/E near 35.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
Amazoncloud computingadvertisingvaluation
Open a keyword to see other news on the same topic.
Related tickers and likely impact
AMZN
▲ Likely positiveAmazon
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Consumer Discretionary |
| Industry | Broadline Retail |
| Market cap | $2.7T |
| Close on 10/22/2026 | 250.49 |
| Change that session | -4.53% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Trade Desk (TTD) Faces A UBS Price Target Cut, Is It 58% Below Fair Value?
UBS has trimmed its price target for Trade Desk (TTD), citing weaker advertiser budget allocation and tougher competition from Amazon for digital ad spending. The share price has rebounded over the past 1 day and 7 days but is still down 15.1% over 30 days and 37.2% over 90 days. The stock's 1-year total shareholder return has declined 76%, pointing to fading momentum as investors reassess growth prospects and risk after the latest guidance and price target cut.
- Prediction: Amazon Could Double by 2030 if This Part of Its Business Delivers
AWS revenue reached $42.23 billion in Q2 FY26, up 37% year over year and its fastest growth in 18 quarters, yet Amazon shares at $262.59 sit below their 52-week high of $287.20. Amazon raised its 2026 capex estimate to roughly $220 billion from about $200 billion, citing higher memory costs, and free cash flow was -$7.6 billion on a trailing basis. The article's five-year base case puts shares at $489.98 by October 2030, while the consensus target is $331.46. Reaching $500 would require a 90.4% gain, implying a forward P/E of 47x on consensus FY2027 EPS of $10.5519. The author calls the target ambitious but credible if AWS keeps growing above 30%, AI margins follow the core cloud path, and revenue outpaces capex; a recession hitting enterprise cloud budgets is the main risk.
- What Could Go Wrong With Amazon Stock?
Amazon (AMZN) earned $135 billion in net income over the four quarters to June 2026, well above its $93.7 billion of operating income, yet its free cash flow was negative $11.6 billion over the same twelve months. Most spending funds new AWS and generative AI capacity; in the June quarter Amazon spent $53.1 billion in cash on capital projects against $45.4 billion of operating cash inflow, and expects about $220 billion of cash capital spending in 2026, up from about $200 billion because memory costs more. Free cash flow fell from $48.3 billion in the twelve months to June 2024 to $13.5 billion a year later, then turned negative, while total debt rose to $223 billion from $134 billion. Investors pay 19.9 times earnings versus 23.0 for the S&P 500, and management cited a $496 billion backlog and 36.7% AWS revenue growth, with most AI capacity contracted for at least five-year terms. The article says the figure to watch is capital spending against operating cash when Amazon reports third-quarter results, expected in October 2026.
- Amazon vs. Alphabet: Is GOOGL's Cloud Growth Being Undervalued?
Amazon and Alphabet are making their cloud businesses more profitable while heavy AI infrastructure spending weighs on cash flow, and their stocks trade at similar valuations: 23.64 times forward earnings for Amazon and 22.83 for Alphabet, per Yahoo Finance. AWS posted $42.2 billion in second-quarter sales, up 37%, with operating income rising to $16.6 billion from $10.2 billion, though it accounts for only 21% of sales. Google Cloud revenue jumped 82% to $24.8 billion and its operating income rose from $2.8 billion to $8.8 billion, giving investors reason to reassess the gap with AWS. Beyond cloud, Amazon's North American retail operating income reached $9.1 billion and advertising grew 26%, while Alphabet's Search and other revenue rose 17% to $63.3 billion and consolidated operating income climbed 30% to $40.8 billion. The core question is which company earns more from the money it invests.
- Amazon (AMZN) Trades at 24 Times Forward Earnings. Can Its Cash Engines Fund the Robotaxi Bet?
Amazon (AMZN) trades at about 24 times forward earnings, and investors are asking whether its cloud and retail businesses can fund the robotaxi bet through Zoox. Regulators approved Zoox to charge for rides, a commercial milestone, but that does not yet prove profitable operations. Second-quarter sales rose 20% to $200.6 billion and operating income rose 43% to $27.5 billion, with AWS revenue up 37% to $42.2 billion and operating income of $16.6 billion. Free cash flow was negative $7.6 billion over the twelve months ended June 30 as property and equipment spending grew, which Amazon mainly attributed to AI investment. The forward P/E is 23.64 versus a 15.40 median for the consumer-discretionary sector, and second-quarter non-operating pre-tax income of $53.4 billion came mostly from Anthropic investments, while hedge fund holders rose to 369 from 353.
- Prediction : Amazon Next Chapter Could Be Its Most Important One Yet
24/7 Wall St. sets a price target of $332.67 for Amazon (AMZN), 30.4% above the current $255.20, and rates the stock a buy with 70% confidence. The thesis rests on AWS, which grew 37% last quarter, its fastest pace in 18 quarters, while Amazon plans to spend about $200B in 2026 on AI infrastructure, chips, robotics and satellites. The article flags risks: trailing free cash flow turned negative at about -$7.6B after second-quarter capex rose 68.44%, and long-term debt climbed to $119.1B from $65.6B. It compares Amazon's valuation with Microsoft and Alphabet, and says the author would stay constructive if AWS growth stays above 30% and free cash flow turns positive in 2027.
Related markets
Latest news
- Why Comfort Systems Plunged Today
Comfort Systems (FIX) fell as much as 13.2% on Friday before trimming its decline to 8.9% by 3:10 p.m. EDT, despite beating revenue and earnings estimates for the quarter. Revenue rose 53.7% and EPS grew 68.6% to $13.91, while backlog climbed to $17.8 billion from $14.1 billion three months earlier. The article attributes the sell-off mainly to the announced year-end retirement of Bill George, a founder and longtime CFO, along with a "sell the news" reaction seen across AI-linked stocks this earnings season. Shares are about 38% below their June all-time high and trade at 19.4 times average 2027 analyst earnings estimates.
- Intel Stock Has Moved an Average of 16% the Day After Its Last 3 Reports. Should You Buy Before the Next One?
Intel reports third-quarter results after the close on Oct. 29, and its stock has moved an average of about 16% in the session after its last three reports: down 17% after January, up 24% after April, and down 8% after July. The company beat its own forecasts each time, yet shares fell twice because management's outlook for the coming months carried more weight. The third-quarter revenue midpoint of $16.3 billion is only about 1% above the second quarter, a sharp slowdown, so the fourth-quarter forecast is seen as the key number to watch. At around 44 times expected 2027 earnings, the author argues the share price already reflects a return to growth, and says he would not buy the stock before the report.
- SpaceX Filing Gives Elon Musk the Final Word on Tesla Merger He Says He’s Staying Out Of
SpaceX stated in an SEC filing that any merger with Tesla must be approved by its controlling shareholder, Elon Musk, who holds roughly 85% of voting power. Musk recused himself from both special committees but publicly endorsed the deal, which Reuters reported created a "mess" for the independent process. Both companies formed special committees on October 20 to evaluate a proposed deal that analysts estimate could create a combined entity worth around $3.5 trillion. REX Financial estimates Musk would hold roughly 57% of combined voting power. Tesla shareholders must clear a 50%-of-all-outstanding-shares threshold, with a vote expected at or near the December 3 annual meeting.
- SpaceX Filing Gives Elon Musk the Final Word on Tesla Merger He Says He’s Staying Out Of
SpaceX stated in an SEC filing that any merger with Tesla must be approved by its controlling shareholder, Elon Musk, who holds roughly 85% of voting power. Musk recused himself from both special committees but publicly endorsed the deal, which Reuters reported created a "mess" for the independent process. Both companies formed special committees on October 20 to evaluate a proposed deal that analysts estimate could create a combined entity worth around $3.5 trillion. REX Financial estimates Musk would hold roughly 57% of combined voting power. Tesla shareholders must clear a 50%-of-all-outstanding-shares threshold, with a vote expected at or near the December 3 annual meeting.
- Meta shares are down 9% this week. Here's why Mike Khouw is buying now
Meta shares fell during the week as investors worried about the cost of building AI infrastructure, even though the company recently reported strong earnings. The company's $1.65 trillion market cap lost $135 billion in four sessions. The author sees Muse, Meta's personal AI agent, as potentially valuable given its reach to 3.6 billion daily active users across Facebook, Instagram, WhatsApp and Messenger. Headwinds include a $25 billion lawsuit in New Mexico, a deal with the founder over potential California billionaire's tax liabilities, concerns about debt, and broader AI jitters. He argues the current valuation, at about 20x fiscal-year earnings, already prices in much of this. He outlines selling December strangles at the 580/745 strikes, collecting about $21.30 per share at today's closing prices, a position that profits anywhere between the one-year high and low.
- Robinhood Is Quietly Building 13 Businesses at Once. Here's Why It Matters.
By Q2 2026, Robinhood had 13 business lines each generating at least 100 million USD in annualized revenue, up from one in 2019 and nine in 2024. The author argues that adding products such as options, crypto, Gold subscriptions and credit cards lets the company earn more from each customer without customer acquisition costs. Robinhood ended Q2 with 28.4 million funded customers, up 7%, 4.8 million Gold subscribers, up 39%, and average revenue per user up 24% to 187 USD. Transaction revenue rose 44% to 776 million USD, alongside 389 million USD in net interest revenue and 143 million USD in other revenue, which reduces reliance on trading activity. The author cautions that annualized revenue is the quarter's revenue multiplied by four, so the 13 lines should not be treated as mature businesses each generating 100 million USD.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.