Amazon’s Bargains Include Its Stock

It’s the quiet before the storm of earnings season, which starts in a week or two. While we wait for the third-quarter updates, here’s a thought: Investor enthusiasm for semiconductor stocks and blue-sky vision companies like SpaceX appears to have sucked money out of stocks of long-established tech companies. Some are now trading at bargain-basement prices. We’re thinking specifically of Amazon, whose stock really deserves a bit more love. 

We know the gripes: Like Alphabet and Meta, Amazon is spending an absolute ton—$220 billion this year alone—on capital expenditures to build out its AI data center capacity. That’s not without risk, for sure: The investment depends on business demand for AI services taking off. Even so, that can’t justify Amazon trading at a discount to Walmart, as it has done for the last 18 months or so. Walmart is expected to grow revenue this year by about 5.6%—about a third of Amazon’s estimated growth rate. And yet Amazon is trading at about 29 times forward earnings, compared with 37 times for Walmart, according to Koyfin data.