Amazon Stock (NASDAQ:AMZN) Eyes $303 – Is It Time to Buy Before the Next Big Surge?
With Amazon's AWS dominance, surging AI investments, and an unstoppable e-commerce empire, is NASDAQ:AMZN undervalued at $214? Will its aggressive $100B capex plan drive shares toward $303, or is the market still overlooking its upside? | That's TradingNEWS
NASDAQ:AMZN Stock – Is $303 the Next Stop, or Is the Market Still Undervaluing Amazon?
Amazon (NASDAQ:AMZN) has been on an aggressive growth trajectory, fueled by a $100 billion capex push, a surging AWS segment, and its deepening AI investments. With shares trading at around $214, some analysts believe AMZN stock is 29% below fair value, projecting an upside to $303 per share. But is this a once-in-a-decade buying opportunity, or is the market missing key risks?
Let’s break down every aspect—financials, AI expansion, AWS dominance, and the valuation case—to determine if Amazon stock is still a strong buy or if investors should tread carefully.
Amazon's Q4 2024 Performance: Another Earnings Blowout
Amazon closed 2024 with $187.8 billion in Q4 revenue, growing 10.5% year-over-year (YoY). The company beat earnings estimates with $1.86 EPS, a staggering 86% YoY jump, driven by higher AWS profitability and better efficiency across its e-commerce and advertising businesses.
- North America segment: $115.6 billion revenue, up 9.5% YoY
- AWS segment: $28.8 billion revenue, soaring 18.9% YoY
- International segment: $43.4 billion revenue, rising 7.9% YoY
- Free cash flow: $38.2 billion, despite record capex spending
The real kicker? Amazon’s net profit margin surged to 10.7%, a massive 440 basis point expansion, proving that AMZN isn't just a growth machine but an increasingly profitable one.
Amazon Web Services (AWS): The Growth Engine Driving AMZN Stock Higher
AWS remains the backbone of Amazon’s financial strength, accounting for nearly 60% of its operating income. But more importantly, AWS is positioning itself as a leader in AI-driven cloud computing, outpacing Microsoft Azure’s 20% growth rate.
CEO Andy Jassy has emphasized AI as Amazon’s biggest opportunity since the cloud revolution itself. AWS is rapidly expanding into AI-driven infrastructure, including its own Trainium and Inferentia chips, reducing dependence on NVIDIA.
Amazon’s $100 billion capex spending in 2025 will primarily focus on AI infrastructure, ensuring AWS remains a market leader. This could significantly expand AMZN’s operating margins while giving it more control over AI workloads.
E-Commerce and Advertising: The Silent Profit Machines
While AWS steals the spotlight, Amazon’s core e-commerce and advertising businesses are quietly becoming profit powerhouses.
- Amazon’s ad revenue soared 26% YoY to $14.65 billion in Q4 2024, making it the third-largest digital advertising platform after Google and Meta.
- Faster deliveries and Prime membership growth continue to drive record-breaking consumer spending.
Amazon’s push into same-day delivery expansion has been a game-changer. This logistics dominance is what makes it nearly impossible for traditional retailers to compete.
Amazon’s Cash War Chest Hits $101.2 Billion
Amazon’s financial strength is undeniable. It closed 2024 with $101.2 billion in cash and marketable securities, crossing the $100 billion mark for the first time ever.
Even with aggressive capital investments, AMZN has $48.6 billion in net cash, underpinning its AA credit rating and financial flexibility. Unlike many high-growth tech stocks, Amazon doesn't need external financing to fund its massive expansion.
Amazon Stock Valuation – Still a Steal at 29% Below Fair Value?
Despite its dominance, Amazon stock trades at a P/OCF of 15.7x, far below its 10-year average of 23.8x.
Fair Value Estimate:
- Analysts project AMZN’s 12-month forward operating cash flow per share at $14.14
- Applying a conservative 21.4x P/OCF multiple, AMZN’s fair value lands at $303 per share
- That implies a 29% discount to current levels, with potential for a 96% cumulative return by 2027
The market may still be undervaluing Amazon’s AI expansion, cloud dominance, and e-commerce growth runway, making it one of the few megacaps trading at a deep discount.
Risks – Can Anything Stop Amazon’s Run?
While Amazon is an absolute powerhouse, risks remain:
- Macroeconomic Uncertainty: Consumer confidence dropped sharply due to potential tariff impacts under the Trump administration, which could slow retail growth.
- AWS Competition: While AWS leads, Microsoft Azure is closing the gap, and Google Cloud’s AI push is intensifying.
- Regulatory Scrutiny: Antitrust concerns could force Amazon to spin off AWS or curb its retail dominance, posing a long-term structural risk.
- Valuation Adjustments: If the market compresses AMZN’s multiples to historical lows, it may take longer for the stock to realize its full upside potential.
Final Verdict – Is AMZN a Buy, Sell, or Hold?
At $214 per share, Amazon (NASDAQ:AMZN) is still one of the most undervalued megacap stocks. With:
- AWS growing at 18.9% YoY and AI infrastructure ramping up
- $100B capex spending fueling AI dominance
- E-commerce and advertising becoming major profit engines
- Strong financials, a $101.2B cash war chest, and improving margins
Amazon stock has all the ingredients for a multi-year bull run.
Price Target: $303 (29% upside)
3-Year Return Projection: 96% cumulative gain by 2027
If the market continues to underappreciate AMZN’s AI growth, it presents one of the best buying opportunities in the market today. For long-term investors, this remains a strong buy.
