Is Amazon Stock a Buy After Falling 13% This Year?

Core Viewpoint - Amazon's stock has declined approximately 13% year-to-date in 2026 despite better-than-expected fourth-quarter revenue and strong sales guidance for Q1 [1][2] Financial Performance - Amazon's fourth-quarter revenue increased by 14% year-over-year to $213.4 billion, with Amazon Web Services (AWS) contributing 17% of that revenue [11] - AWS revenue rose 24% year-over-year in Q4, up from 20% in Q3, indicating strong growth in a segment with an annual run rate exceeding $140 billion [6][11] Capital Expenditures and Growth Strategy - Management plans to invest $200 billion in capital expenditures in 2026, focusing on growth opportunities, particularly in artificial intelligence (AI) [2][10] - The company believes this significant investment will yield strong long-term returns on invested capital [2][10] AI and Cloud Computing Opportunities - Amazon's cloud computing business is experiencing substantial growth driven by demand for AI, with customers increasingly running AI workloads on AWS [7] - The company is also seeing momentum in its AI chip business, particularly with the Trainium2 chip, which has become a multibillion-dollar annualized product [9] Market Position and Valuation - Amazon's stock is currently valued at about 28 times earnings, which may not be a bargain but is considered sensibly priced given the company's financials [11] - AWS's operating income accounted for half of Amazon's fourth-quarter operating income and 57% of its full-year operating income, highlighting its importance to the overall business [11][12] Investment Perspective - Despite the stock's decline, there is a belief that it may represent a buying opportunity due to the company's impressive growth prospects [3][12] - The heavy reliance on AWS presents both risks and opportunities, as increased capital expenditures could enhance overall margins and drive long-term earnings growth [12]