Amazon is trading at its lowest valuation ever

Core Viewpoint - Amazon's stock has experienced significant volatility, reaching its lowest valuation in history following the Q4 2025 earnings report, with shares down over 15% in the past month [1][3]. Valuation Analysis - Amazon's trailing price-to-earnings (P/E) ratio has dropped to approximately 29x, the lowest in its public market history, contrasting sharply with previous cycles where it often exceeded 100x [3][4]. - Historical data shows that Amazon's valuation has previously surged above 100x earnings, peaking near 350x during early growth phases and over 150x during the pandemic [4]. - The current valuation is near historical lows, last seen when Amazon was significantly smaller, indicating a potential for future multiple expansion [5][7]. Financial Performance - In Q4 2025, Amazon reported a 14% year-over-year increase in net sales to $213.4 billion, with AWS revenue rising 24% to $35.6 billion, driven by strong demand for cloud and AI services [9]. - Adjusted earnings per share were $1.95, slightly below expectations due to one-off costs [9]. Capital Expenditure Concerns - The stock has faced pressure due to guidance indicating approximately $200 billion in capital expenditures for 2026, significantly higher than 2025 levels, primarily directed towards AI infrastructure [10]. - Following the earnings report, shares fell more than 10%, leading to some analyst downgrades, although Wall Street maintains a broadly positive outlook with price targets suggesting over 30% upside [10].