Is Now a Good Time to Buy Amazon Stock?
The article argues Amazon (AMZN) is a strong buy due to attractive valuation relative to growth, exploding demand for AWS driven by AI infrastructure, and high demand for its custom chips. Despite a 90% stock rise over three years, cash flow and net income have grown faster, trading at multi-year low multiples. With accelerating revenue growth and significant AI commitments, Amazon presents a solid long-term investment opportunity.
Amazon (AMZN -0.70%) stock has risen 90% over the past three years, but the company's fundamentals improved even faster. Amazon's revenue and profitability have grown significantly, with momentum in increasingly important areas of the economy, such as cloud computing, AI, and chips.
Here are three reasons Amazon stock is a no-brainer buy today.
Image source: The Motley Fool.
1. Attractive valuation relative to growth
Despite the stock's recent returns, Amazon's cash from operations more than doubled over the past three years, reaching $149 billion on a trailing-12-month basis. Net income improved at an even higher rate, reaching $91 billion.
Relative to cash from operations and earnings, the stock is trading at its lowest valuation multiple in more than a decade -- 18 times cash flow and 30 times earnings. These are attractive prices to pay, given the momentum in Amazon's most profitable business -- cloud services.
NASDAQ: AMZN
Key Data Points
2. Demand for AWS is exploding
Amazon Web Services (AWS) is the world's leading cloud provider and a major driver of Amazon's operating profit. The segment is now running at roughly $150 billion in annualized revenue, and sales grew 28% year over year in the first quarter.
That momentum is being fueled largely by rising enterprise demand for artificial intelligence (AI) infrastructure and services, positioning Amazon as a key beneficiary of companies' AI investments.
For example, companies are using Amazon Bedrock on AWS to build AI applications and agents. Demand has been explosive. In the first quarter, spending on Bedrock nearly tripled from the previous quarter. That demand velocity indicates a lot more demand to come.
3. Amazon's chips are in high demand
CEO Andy Jassy said, "We're in the middle of some of the biggest inflections of our lifetime." This is a significant statement, considering Amazon's revenue growth has accelerated. Since the first quarter of 2025, quarterly revenue growth accelerated from 9% year over year to 17% as of Q1 2026. Jassy's statement implies a substantial runway for more growth.
Amazon continues to discover new opportunities. For example, it's now offering its custom-designed chips to leading AI companies, and it's becoming a sizable business in its own right. Amazon said its chips are now generating $20 billion in annualized revenue and growing at triple-digit rates. It should grow substantially larger, with more than $225 billion in revenue commitments, including multiyear agreements with OpenAI and Anthropic.
Amazon is seeing steady growth across multiple businesses, including e-commerce, subscription services (e.g., Prime), and advertising. This is while the stock is trading at its lowest valuation in years and showing clear momentum in supplying crucial AI compute for enterprise.
A recession in the broader economy or a slowdown in the AI cloud market would likely send the stock down. But for a long-term investor, Amazon is a solid stock to buy right now and should be a rewarding investment over the next decade.
