Amazon(US:AMZN) 3 6 Ke·2025-09-26 02:59Core Viewpoint - Amazon's stock performance has lagged behind its peers in the "Magnificent Seven" group, but analysts believe it presents significant upside potential due to its current undervaluation and improving market conditions [1][7]. Group 1: Stock Performance and Valuation - Amazon is the last among the "Magnificent Seven" to recover from year-to-date declines, with its stock price remaining flat, underperforming the other six giants and the S&P 500 index, and is currently 17% below its estimated fair value of $266.56 [1]. - The expected price-to-earnings ratio for Amazon is 33.19, compared to the industry average of 18.02, indicating that Amazon's valuation is relatively low when compared to its peers [5]. - The Relative Strength Index (RSI) is at 39, suggesting that the stock is nearing oversold territory, with a support level at $212 [3]. Group 2: Market Sentiment and Analyst Ratings - Following an upgrade from Wells Fargo to "Overweight," market sentiment towards Amazon has shifted positively, with expectations for accelerated growth in AWS revenue due to the Project Rainer data center [7]. - Over the past three months, Amazon's earnings estimates have been raised approximately 51 times, indicating a more optimistic outlook for the upcoming fourth-quarter earnings report [7]. Group 3: External Factors Impacting Performance - Tariff concerns that previously affected Amazon's North American e-commerce sales, which reached $100.1 billion with an 11% year-over-year growth, are now seen as less of a threat due to improved market conditions [8]. - The recent 25 basis point interest rate cut by the Federal Reserve is expected to create a more favorable environment for Amazon, particularly in logistics and consumer spending, coinciding with the upcoming holiday shopping season [8]. Group 4: AWS Growth and Competitive Landscape - AWS's growth rate of 18% is lower than that of competitors Microsoft Azure and Google Cloud, which reported growth rates of 39% and 32%, respectively [10]. - Despite AWS's current challenges, analysts believe that if new projects are executed effectively, AWS can maintain its leading market share of 30% [10]. - Wells Fargo has raised its 2026 AWS growth forecast from 19% to 22%, driven by the anticipated performance of the Project Rainer facility [14]. Group 5: Strategic Adjustments and Market Position - Amazon's decision to close all Amazon Fresh stores in the UK reflects a strategic shift towards efficiency, with plans to convert some locations into Whole Foods stores [16]. - The online grocery market is projected to grow at a compound annual growth rate of 26.83% from 2025 to 2025, and Amazon aims to double the number of Prime members with multiple online grocery options in the UK [16]. - Overall, while Amazon has faced challenges, it is adapting to market changes and is expected to capitalize on seasonal growth opportunities in the upcoming quarters [18].