Research note · 2 October 2026

Amazon.com Inc AMZN

LONG price $251.52 · base case $321.80 · expected +28% over 540 days

Download the PDF (16 pages)

The call

Amazon's core operating engines—AWS, advertising, and retail—are delivering robust earnings growth (operating income up 36.6% YTD, AWS up 37% YoY in Q2 2026, advertising up 26% YoY), yet the market prices the stock at a trailing P/E of 20.2x, well below its own five-year median of 46.0x. The discount reflects the market's fixation on negative trailing-twelve-month free cash flow of -$8,993.5 million caused by a $173,028 million capex cycle for AI infrastructure, and on the $53.4 billion one-off Anthropic mark-to-market gain that inflates reported net income.

Why the opportunity exists, in the desk's view: complexity.

What decides the case

• Capex intensity normalization
• AWS and Advertising margin expansion

Model-authored research with an editorial gate; every figure traces to the filing or a stated assumption and every calculation was reproduced before publication. Not investment advice. Do not redistribute.