Core Viewpoint - Amazon's recent underperformance is attributed to short-term fluctuations rather than fundamental issues, with the company maintaining a strong position through continuous innovation and a robust business ecosystem. The stock price has remained stable, indicating high attractiveness in current valuations [1]. Financial Performance Outlook - Amazon is set to release its Q3 earnings report on October 30, with Wall Street predicting a revenue growth rate of nearly 12% year-over-year and a non-GAAP EPS growth of 9.2%. This revenue growth rate is consistent with previous quarters, reflecting strong growth momentum in cloud services and AI [5]. - The alignment between earnings and revenue growth is crucial, with the expected net profit growth slightly lagging behind revenue growth, which is acceptable given Amazon's prioritization of R&D over net profit. Historical trends show that this strategy has solidified Amazon's leading position in e-commerce and cloud services [5]. - Over the past eight quarters, Amazon has consistently exceeded EPS expectations, with actual EPS often surpassing forecasts by approximately 20%. Revenue has also generally exceeded expectations, with the last quarter's revenue exceeding Wall Street predictions by $5.6 billion [6]. Analyst Expectations - Analyst expectations are trending positively, with no downgrades and 38 upgrades in revenue forecasts, indicating strong confidence in the growth potential driven by AI [6]. Long-term Growth Drivers - Amazon is expected to sustain impressive growth over the long term, leveraging its leading position in cloud infrastructure through AWS as a solid foundation for AI development. This positions Amazon ahead of competitors like Microsoft and Google [8]. - The advantages of AI are anticipated to create a flywheel effect for the company, enhancing cross-selling of AI features to existing cloud customers, optimizing internal processes, and improving customer experiences in e-commerce and digital advertising [9][10]. - Reports suggest that Amazon plans to implement a new round of layoffs, potentially affecting up to 15% of HR staff, as a result of increased AI application in internal processes. This aligns with broader trends of automation impacting a significant portion of the workforce [10]. Valuation Insights - Amazon's current valuation is attractive, with a projected decline in forward P/E ratio by nearly half over the next five years, indicating a bullish signal. The forward P/E ratio is expected to fall below 20 times by FY2028, suggesting extreme undervaluation given Amazon's dominance in e-commerce and cloud services [12]. - The potential for automation to reduce the workforce by approximately 600,000 positions could significantly enhance the company's long-term valuation, even if such reductions take 5-7 years to implement [12]. Conclusion - The potential for automation alone could add $1.2 trillion to Amazon's current market value of $2.3 trillion, making continued investment at current low stock prices a compelling choice. Even if the automation revolution takes a decade to fully realize, the opportunity remains valuable as Amazon continues to capitalize on AI advancements [15].