60 Out of 65 Wall Street Analysts Say Buy Amazon. Not One Says Sell.

Amazon (NASDAQ:AMZN | AMZN Price Prediction) just delivered its fifth consecutive quarter beating Wall Street’s EPS bar, and the trailing P/E of 33x is doing something that should not be possible for a business growing the way this one is.

The thesis is simple. Amazon owns the rails of two enormous businesses, cloud computing and online retail, and is quietly becoming a third thing, a custom silicon company, while the market still values it like a slightly-better-than-average mega cap. Amazon’s current P/E ratio of 33x is substantially lower than the historical 10-year median of 81x, which means you are paying less than half the multiple long-term holders of this stock have historically paid, and I am paying it for a business with materially better margins than the one those holders owned.

AWS Is Accelerating

AWS posted $37.587 billion of revenue in Q1, growing 28% year-over-year, the fastest growth in 15 quarters. Andy Jassy framed the scale of this on the earnings call. “AWS is now a $150 billion annualized revenue run rate business. It is very unusual for a business to grow this fast on a base this large, and the last time we saw growth at this clip, AWS was roughly half the size.” The bigger AWS gets, the harder growth should be. Growth is accelerating instead.

The backlog locks the conviction in. $364 billion in Q1 backlog, and that figure does not include the recent Anthropic deal of over $100 billion. That is multiple years of forward AWS revenue contractually committed by customers who have already signed. OpenAI, Anthropic, Meta (NASDAQ:META), NVIDIA (NASDAQ:NVDA), Uber (NYSE:UBER). The list of names buying compute from Amazon reads like a who’s who of the companies actually building the AI economy.

The Earnings Are Catching Up to the Story

Q1 EPS of $2.78 against a $1.73 estimate is a 60.69% beat. Strip out the one-time Anthropic mark and operating income still rose 30%. Operating margin hit 13.1%, the highest ever for the company. North America retail expanded operating margin to 7.9% from 6.3% a year earlier. International operating income grew 40%.

Then there is the chip business, which most investors still do not fully understand. If our chips business was a standalone business and sold chips produced this year to AWS and other third parties as other leading chip companies do, our annual revenue run rate would be $50 billion, Jassy said. Trainium, Graviton, Nitro. Reported run rate of over $20 billion, growing triple-digit percentages year-over-year. The margin implication, in Jassy’s own words, is “tens of billions of dollars of CapEx each year and several hundred basis points of operating margin advantage versus relying on other chips for inference.”

The Risk

Trailing free cash flow has declined 95% to $1.2 billion. Capex jumped 76.68% YoY to $44.203 billion in Q1 alone, and management is guiding to roughly $200 billion in capex across 2026. Long-term debt nearly doubled to $119.1 billion. If AI demand stalls, this becomes a problem.

Per Jassy, Amazon has “been through this cycle with the first big AWS growth wave, and we like the results. We expect to feel similarly about this next wave with much larger potential downstream revenue and free cash flow.” A substantial portion of 2026 capex is already covered by signed customer commitments. Data centers depreciate over thirty-plus years. Chips and servers run five to six. The cash leaves first, the revenue arrives later, and that is how AWS was built the first time.

Why the Multiple Looks Mispriced

You are paying roughly a third of the historical multiple for a business with the highest operating margin it has ever posted, the fastest AWS growth in nearly four years, a chip company hidden inside it, and a contracted backlog larger than the GDP of most countries. Sixty of the 65 covering analysts rate it Buy or Strong Buy, and not one rates it Sell.