Amazon Valuation and Investment Outlook: Is It Worth Buying Now?

📊 Is Amazon Expensive Right Now?

After Amazon's stock surge, many investors ask: "Should I get in now?" Let's analyze Amazon's current value through various valuation metrics.

💹 P/E Ratio (Price-to-Earnings)

Current Numbers

Current P/E: ~31x
10-year median: ~80x

On the surface, this looks very cheap compared to historical averages. But P/E ratio requires caution with Amazon.

Why is P/E Distorted?

Due to new accounting rules, unrealized gains from Amazon's stock investments are included in net income. This quarter alone, investment gains added $10 billion, inflating net income.

💰 P/FCF (Price-to-Free Cash Flow)

Current Situation

Current P/FCF: Very high (hundreds of times)
Reason: Free cash flow is near zero

Why is FCF Low?

FCF = Operating Cash Flow - CapEx

Amazon is currently investing nearly all operating cash flow into AI data centers. This isn't a problem—it's intentional growth investment.

📈 P/OCF (Price-to-Operating Cash Flow) - Key Metric

Why is This Metric Important?

It shows cash generation ability before capital expenditures, more accurately reflecting Amazon's actual earning power.

Current Numbers

Current P/OCF: ~18x
10-year median: ~26x

Based on operating cash flow, Amazon is trading at a 30%+ discount to historical averages!

Upside Scenario

If P/OCF reverts to median (25.7x)? → Calculation shows approximately 40% upside potential.

🏰 Economic Moat

Is the Moat Widening?

From the perspective of an investor analyzing Amazon for over 10 years, Amazon's competitive advantage is expanding:

AWS: #1 in cloud market, leading AI infrastructure
Logistics Network: Scale competitors can't replicate
Prime Ecosystem: High customer loyalty
Advertising Business: High-margin new business growing rapidly

📉 Technical Analysis

Chart Situation

Expected to break long-term resistance at $230
Opening above $250 would set new all-time high
Possible transition to Stage 2 uptrend

🎯 4 Things Investors Should Watch

Key points to monitor as a long-term shareholder:

1️⃣ Gross Margin

Confirm continued rise above 50%

2️⃣ Three Growth Drivers

AWS (most important)
Advertising
3P Fulfillment

Monitor if all three continue accelerating

3️⃣ Operating Cash Flow

Confirm cash generation ability is maintained

4️⃣ CapEx Trends

Currently intentionally high, but watch for normalization timing

📌 Conclusion: Investment Thesis

Positive Factors	Risk Factors
AWS reacceleration	High CapEx = Low FCF
Margin improvement	Competition intensifying
Undervalued P/OCF	Regulatory risks
Strong balance sheet	Macro uncertainty

Amazon is currently at the intersection of growth and value. It's cheap based on operating cash flow versus historical averages, while two high-margin growth engines—AWS and advertising—are accelerating simultaneously.

From the perspective of an investor who's held since 2010, the investment thesis remains valid. However, it's important to maintain a long-term view while preparing for short-term volatility.