Among the highly-watched “Seven Tech Giants” (Apple, Alphabet, Amazon (AMZN), Meta Platforms, Microsoft, NVIDIA, and Tesla), the market performance of these companies often influences the broader market trend. However, even in years of strong overall market performance, the giants do not always advance uniformly. Since the beginning of this year, Amazon’s stock price performance has been relatively lagging, making it one of the weakest performers within this group, which in turn has sparked market attention towards its current investment value.
As of October 30, Amazon’s year-to-date return had at one point been below 2%, significantly trailing some of its peers. This weak performance partly stemmed from investors favoring companies that directly benefit from the artificial intelligence sector, such as NVIDIA, which supplies critical AI chips, and Alphabet, which is actively transforming its product lines. In contrast, the results of Amazon’s investments in the AI field appeared less prominent at the time. However, a turnaround soon emerged. The company’s quarterly earnings report revealed a 13% year-over-year increase in net sales, reaching $180.2 billion, with both revenue and earnings per share exceeding expectations. More importantly, its core cloud computing business, Amazon Web Services, generated revenue of $33 billion, also surpassing market forecasts. This robust earnings data promptly boosted the stock price.
From a valuation perspective, Amazon currently presents renewed attractiveness. Its price-to-earnings ratio is approximately 34 times, which, while still above the S&P 500’s average of 26 times, shows a significantly narrowed premium compared to its own historical levels, placing the stock price at a relatively low position. This means investors no longer need to pay the high premium seen in the past. Meanwhile, the company’s recently announced plan to lay off approximately 14,000 employees, although limited in scale relative to its vast total workforce and emphasized by the company as focusing on corporate culture and talent structure optimization, is widely expected by the market to help further improve its future profitability.
Despite short-term fluctuations in market attention, Amazon’s core competitive advantages and long-term growth logic remain solid. The company not only possesses highly successful and continuously growing core businesses but is also well-prepared to capture future opportunities across multiple key areas. Its cloud computing services form the core foundation for its participation in the AI competition, and the company is also setting its growth sights on high-potential markets such as healthcare and groceries. For investors with a long-term perspective, Amazon’s vast business ecosystem, clear growth pathways, and strategic positioning across multiple frontier sectors make it a highly promising long-term investment. The current market neglect might just be providing an attractive entry point for investment.
