Should You Buy Amazon Stock Before Oct. 30?

Core Insights - Amazon is set to report its third-quarter results on October 30, with a focus on its artificial intelligence (AI) initiatives that could drive faster revenue and earnings growth compared to the broader market [2][12] - The company has deployed over 1,000 AI applications across various sectors, including e-commerce, cloud computing, streaming, and digital advertising, aiming to enhance efficiency and create new revenue opportunities [2][12] Amazon Web Services (AWS) - AWS holds a 30% market share as the largest cloud infrastructure provider globally, playing a central role in Amazon's AI strategy by focusing on infrastructure, large language models (LLMs), and software [4][8] - AWS generated $30.9 billion in revenue in the second quarter, reflecting a 17% year-over-year increase, but faces a supply-demand imbalance that limits faster revenue growth [9][10] - AWS accounted for 18% of Amazon's total revenue in the second quarter but contributed 57% of the company's operating income, highlighting its importance as a profitability engine [12] AI Development and Innovations - Amazon has developed its own AI accelerator chips, Inferentia and Trainium, with Trainium2 chips offering up to 40% better price performance than GPU-based servers [6] - The AWS Bedrock platform provides businesses access to ready-made LLMs from leading AI companies, while Amazon's own LLM, Nova, has become the second-most popular model on the platform [7] Logistics and Efficiency - Amazon has restructured its U.S. logistics network into eight regions, resulting in a 12% reduction in the average distance packages travel and a 15% decrease in the number of touches per package, which enhances profit margins [13] - The company's second-quarter earnings per share (EPS) rose by 33% to $1.68, surpassing Wall Street's estimate of $1.33, following a 62% earnings growth in the first quarter [14][15] Market Position and Valuation - Amazon's stock is currently trading at a price-to-earnings (P/E) ratio of 32.5, slightly below the Nasdaq-100 index's P/E ratio of 33.1, with expectations of EPS growth to $7.59 by 2026, leading to a forward P/E ratio of 27.9 [16][17] - Given Amazon's history of exceeding Wall Street's estimates, the stock may be undervalued, presenting a potential opportunity for long-term investors [19]