Evaluating Amazon's (AMZN) Valuation Following a Recent 7% Decline in Share Price
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 13 2025
0mins
Should l Buy AMZN?
Source: Yahoo Finance
Amazon's Recent Performance: Amazon.com has experienced a 7% pullback in its stock price over the past month, despite continued double-digit growth in revenue and net income, indicating a potential opportunity for long-term investors.
Valuation Insights: The fair value of Amazon is estimated at $234.75, slightly above its recent closing price of $226.19, suggesting modest upside potential, although projections may be conservative due to not accounting for future growth from pipeline projects.
Risks and Considerations: Slowing momentum in Amazon Web Services (AWS) and increasing competition in the cloud sector could pose challenges to growth assumptions, particularly if AI investments do not yield higher margins.
Investment Opportunities: Investors are encouraged to explore other high-growth tech and AI stocks, as well as undervalued companies and dividend stocks, to enhance their investment strategies and capitalize on market mispricing.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 199.600
Low
175.00
Averages
280.01
High
325.00
Current: 199.600
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
- Accelerating Cloud Growth: Amazon Web Services (AWS) saw a 24% revenue increase in Q4, the fastest growth in 13 quarters, with CEO Andy Jassy noting that the custom chip business has surpassed a $10 billion annual revenue run rate, indicating that AI investments are beginning to yield returns.
See More
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- AWS Growth Acceleration: Amazon's cloud computing platform, AWS, grew at a pace of 24% in Q4, marking the fastest growth in 13 quarters, highlighting its critical role in AI model development and enhancing Amazon's competitive position in the market.
- Valuation Pullback Justified: Despite significant revenue and earnings growth, Amazon's stock has declined by approximately 7% since 2025, with its PE ratio dropping to 26.5 times, reflecting a market reassessment of its valuation, potentially providing a reasonable buying opportunity for investors.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2026, primarily for data center construction, which may impact cash flows; however, if AI computing demand continues to grow, this investment will support future business expansion.
- Investor Confidence Recovery: Although the Motley Fool analyst team did not include Amazon in their current best stock picks, analysts believe that Amazon is poised for a stock rebound in 2026, indicating a recovery in market confidence regarding its future performance.
See More
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- Amazon's Investment Potential: Despite a 10% decline in Amazon's (AMZN) stock this year, its cloud services saw a 24% year-over-year growth in Q4, indicating strong sales growth and potential for rebound, making a $1,000 investment appealing for future gains.
- Impact of AI Spending: Amazon's significant spending on artificial intelligence raises market concerns; however, the company can adjust its spending strategy at any time, akin to its early operational model, which will ultimately drive higher profit growth in the long run.
- American Express as Economic Indicator: American Express (AXP) reported a 10% year-over-year revenue increase and a 13% rise in net income in Q4, reflecting strong consumer spending in the U.S. economy, suggesting that a $1,000 investment could yield stable returns.
- Dividend Growth Advantage: With a P/E ratio of 23, American Express stands out against competitors Visa and Mastercard, and its 16% dividend increase this year provides investors with a higher margin of safety and long-term return potential.
See More
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- User Base Advantage: With over 3.5 billion users and a 7% year-over-year increase in daily active users, Meta provides a robust growth potential for its digital advertising business, which Ackman identifies as a key factor for investment.
- Strong Financial Performance: Meta's revenue grew by 22% in 2025, and its price-to-earnings ratio has decreased from 21.2 to 18.2, indicating that its stock is undervalued, which Ackman sees as an excellent buying opportunity.
- Strategic Positioning: Ackman plans to develop Howard Hughes Holdings into a diversified holding company, demonstrating his strategic vision for seeking long-term growth in his investment portfolio, with the investment in Meta being a key component of this strategy.
See More
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- Enhanced User Features: The new functionality allows users to seamlessly switch between watching and listening within the same show, supporting picture-in-picture mode and offline downloads, significantly improving user convenience and content consumption flexibility.
- Innovative Ad Insertion: The newly introduced HLS format supports dynamic video ad insertion, allowing content creators to insert ads through participating ad networks, and while Apple will not charge creators for distribution, it will impose impression-based fees on ad networks, potentially generating new revenue streams for the company.
- Intensifying Market Competition: As platforms like YouTube and Spotify continue to invest in video podcasting, Apple's initiative not only responds to market trends but may also impact revenue growth in its Services segment, which generated $30 billion in the most recent quarter.
See More
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- Video Podcast Integration: Apple announced a new integrated video podcast experience for Apple Podcasts this spring, allowing users to seamlessly switch between watching and listening, enhancing user experience and competing with Spotify, YouTube, and Netflix.
- Enhanced User Features: The new features support picture-in-picture mode and offline video downloads, catering to user demands for flexible viewing while empowering content creators with greater control to foster their business development.
- Technical Update: The update introduces HLS (HTTP Live Streaming) protocol, enabling adaptive video playback and dynamic ad insertion, which is expected to attract more creators and enhance advertising revenue potential.
- Increased Market Competition: As competitors like YouTube and Spotify ramp up investments in video podcasts, Apple's move not only responds to market trends but may also drive revenue growth in its services segment, despite Apple not disclosing podcast-specific revenue.
See More
