Amazon shares trade at $259.39, a forward earnings multiple of 23 that 24/7 Wall St. calls closer to a mature retailer than a hyperscaler growing AWS at 37%. The firm sets a $343.50 price target, implying 32.8% upside, while flagging $200 billion in 2026 capital spending that has pushed free cash flow negative.
Amazon stock trades at $259.39, sitting 1.89% below its 52-week high of $287.20. The stock has climbed 12.69% year to date. Yet 24/7 Wall St. rates the stock a buy with a $343.50 price target, implying 32.8% upside over the next 12 months, at a 90% confidence rating. The firm argues the valuation lags what AWS is now delivering.
Why the Multiple Looks Compressed
Amazon's Q2 FY26 revenue reached $200.6 billion, up 19.62%. Operating income climbed 43.24% to $27.46 billion. AWS grew 37%, its fastest pace in 18 quarters, carrying a $496 billion backlog, and advertising revenue rose 26%. Even so, Amazon trades on a trailing P/E of 21 and a forward P/E of 23, a multiple 24/7 Wall St. says fits a mature retailer more than a cloud business growing at this pace.
How Microsoft and Alphabet Compare
Microsoft's Azure trails AWS's 37% growth pace this quarter, yet Microsoft trades at a materially richer forward multiple than Amazon's 23x, according to 24/7 Wall St. Alphabet mirrors Amazon's ads-plus-cloud model and typically trades in the low 20s forward, leaving Amazon with almost no premium despite the fastest growth among the three.
Bulls Point to AWS Margins
AWS margins hit 39.4% in Q2, and the majority of 2027 AI capacity is already reserved, 24/7 Wall St. said. According to 24/7 Wall St.: Andy Jassy said AWS will "very possibly be a trillion dollar annual revenue business." Under the firm's bull scenario, the price target rises to $393.98, a 52.32% total return if AWS keeps accelerating.
Capex Is the Bear Case
Amazon's roughly $200 billion in 2026 capital spending has pushed trailing free cash flow negative to -$7.6 billion. Long-term debt has climbed to $119.1 billion from $65.6 billion. Reported GAAP earnings have also been lifted by $53.4 billion in non-operating gains tied to Anthropic, and the third quarter faces an 80-basis-point foreign-exchange headwind. Still, 24/7 Wall St.'s bear case implies a $293.37 target, a 13.42% gain.
Management notes servers reach break-even in under three years and data centers can be monetized for more than 30 years, so the firm treats the free-cash-flow drop as investment timing rather than a change in the underlying business.
Source: 24/7 Wall St.
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