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.