- Price
- $249.67 → $249.15(−0.2%)
- Discount
- 16.8% → 16.9%(+0.2 pts)
- Next earnings is estimate
- No → Yes
- Thesis
- The market discounts Amazon mainly because of its record AI spending. Amazon plans to spend about $220 billion in 2026 on AI data centers and chips. This spending pushed free cash flow negative. Investors fear the spending will not earn a strong return quickly. They also worry that pending antitrust cases could force costly changes to two of Amazon's most profitable businesses, its ad auctions and its marketplace. For the gap to close, AWS operating margins must keep expanding. The large backlog of signed cloud contracts must also keep converting into revenue. AWS operating margin already reached 39.4% in Q2 2026, up from about 33% a year earlier. Its contract backlog jumped by $132 billion in one quarter, to $496 billion. This shows real demand already exists for the new capacity. A new FTC advertising lawsuit, filed in August 2026, adds to an existing FTC marketplace monopoly case set for trial in 2027. Neither case will resolve quickly. Amazon reportsis expected to report Q3 2026 results on October 29, 2026. That report should show whether AWS margins and backlog conversion keep improving. If they do, and the antitrust cases do not force major business changes before their 2027 trial dates, the discount can close over the next four to six quarters.
- Recent events
- 2026-09-30: Amazon and Synopsys signed a multi-year deal worth more than $1 billion. Synopsys will supply chip design technology for Amazon's Trainium, Graviton and Nitro chips. Amazon pays a license fee plus royalties that grow with chip volume.
2026-09-01: Amazon continued cutting jobs in 2026, including corporate technology and fulfillment roles in Washington state, after eliminating about 16,000 corporate positions worldwide in January 2026 as part of its shift toward AI.
2026-08-31: The FTC and 22 states sued Amazon over its advertising auction practices. The lawsuit says Amazon hid surcharges that turned second-price auctions into first-price auctions.
2026-08-31: The FTC and 22 states sued Amazon in Seattle, saying it overcharged advertisers by more than $20 billion since 2019 by secretly overriding its second-price ad auctions with higher, undisclosed prices. Amazon denied wrongdoing and said its auctions lower advertiser costs.
2026-07-30: Amazon reported Q2 2026 results. Revenue was $200.6 billion, up 20% from last year. AWS revenue grew 37%, to $42.2 billion.