The recent drop in the company’s share price — coupled with expectations for durable long-term earnings growth — have brought its valuation to levels rarely seen since the company went public in 1997. This could limit additional downside in the event of further weakness in the broader market.

“You’d be hard pressed to look at Amazon’s multiple here and not see it as appealing relative to both tech and retail, and given its multiple secular tailwinds, this looks like an incredible opportunity,” said Clayton Allison, portfolio manager at Prime Capital Financial.

While tech valuations have fallen broadly in the recent market selloff, the ratio of Amazon’s price to its earnings stands out relative to its history. The stock is trading at around 28 times its estimated future earnings, which is roughly half the 10-year average, and below that of major retail rivals that used to have lower multiples like Walmart Inc. and Costco Wholesale Corp. It also trades at a discount to Apple Inc., which was several times cheaper than Amazon just a few years ago. 

The valuation has fallen in recent years because Amazon has focused on efficiency and cost cutting, which has lifted its profitability. In the short term, though, the hit has largely been a result of the broader market selloff.

Amazon shares are 6.3% lower this year, and are coming off seven straight weekly declines, the longest such streak since May 2022. While Amazon is lagging the Nasdaq 100 Index since the beginning of the year, it has performed modestly better than the Bloomberg Magnificent 7 Index. 

The stock dipped 0.1% on Wednesday.

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Wall Street remains almost uniformly positive on the fundamentals of Amazon’s e-commerce and cloud-computing business, Amazon Web Services. More than 95% of the analysts tracked by Bloomberg recommend buying the shares. It also trades more than 30% below the average analyst price target.

Brian White, an analyst at Monness Crespi Hardt & Co., recently affirmed a buy rating and $265 price target on the stock, writing that Amazon’s profitability is below its long-term potential.

“The company’s long-term growth path is attractive across the e-commerce segment, AWS, digital media, advertising, Alexa, robotics, AI, and more,” he added. 

The company recently unveiled an artificial intelligence-powered version of its Alexa voice-activated assistant product, which analysts see as supporting the company’s growth. Revenue at Amazon is expected to rise 9.6% this year and hit a 10.4% pace in 2026, driving net earnings from 15% in 2025 to 20% next year.

There are, though, near-term clouds for Amazon, as tariffs and broader economic uncertainty weigh on the outlook for both consumer spending and the adoption of AI services. 

Amazon’s most recent results paint a mixed picture for AI. AWS revenue grew 19%, but didn’t accelerate as much as anticipated. The company said its cloud business was facing capacity constraints — echoing Microsoft Corp., which is also struggling to meet AI-related demand. Amazon said it would invest about $100 billion this year, mostly on AI-related expenditures like data centers and other infrastructure.

Investors have become increasingly focused on when the heavy spending on AI will pay off in a more concrete fashion. This issue, coupled with the broader questions about the economy, could limit the ability of big tech stocks to rebound, even with the more attractive multiples.

“There was over-enthusiasm surrounding big tech earlier this year, and while we are getting to levels where they look attractive again, good fundamentals or multiples don’t really matter when there’s so much uncertainty,” said Kristian Kerr, head of macro strategy for LPL Financial. “We need a lot more clarity for a sustainable move higher.”