Key Points
Amazon (NASDAQ: AMZN) is experiencing significant market interest, with its stock rebounding this year in line with the S&P 500. However, it is currently trading at its lowest price-to-earnings (P/E) ratio ever, at just 21 times trailing-12-month earnings.
Management anticipates a substantial increase in capital expenditures, forecasting $220 billion in spending by 2026. In Q2 2026, revenue from Amazon Web Services (AWS) surged nearly 37% year over year, marking the highest growth in 18 quarters. Despite these gains, the company’s free cash flow has turned negative, which is causing concern among investors.
Amazon’s stock may appear inexpensive based on earnings metrics, but its elevated price-to-free-cash-flow ratio indicates potential investment risks until the company returns to positive cash flow.
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