Already three days into the week, it has been headline making for some big, noteworthy AI centric tech names.
Nvidia (NVDA) touched a record high. Rival AMD (AMD) just hit a record high. Marvell Technology (MRVL) lifted its revenue outlook by billions of dollars, and struck a bullish note on the size of its long-term total addressable market.
Then we have a tech behemoth like Amazon, which has not hit a record high. The AWS purveyor's shares are down 8.5% from their early August 52 week highs. By comparison, Azure owner Microsoft (MSFT) shares are down 4.2% from their 52-week high.
Interestingly, at its current trailing price-to-earnings (P/E) ratio of 20x, Amazon is trading at one of its lowest multiples in years, the team at online trading and investor eductation platform TrendSpider pointed out in their analysis below.
It's unclear if TrendSpider's calculations reflect the massive investment gain in the second quarter from Amazon's investment in Anthropic (ANTH.PVT). A request for comment from TrendSpider wasn't immediately returned.
Yahoo Finance AlphaSpace data shows Amazon shares trading on a trailing P/E ratio of 20x. This is below the five-year average trailing P/E ratio on Amazon of 60x and below the 10-year average of 102.3x, according to Yahoo Finance AlphaSpace data.
Amazon has the second-lowest trailing P/E ratio among the "Magnificent Seven" names. Only Alphabet trails, at 17.7 times forward earnings, per Yahoo Finance AlphaSpace data.
There are a couple of factors likely holding Amazon's stock back.
For starters, in early September, the Federal Trade Commission (FTC) and 22 states filed a lawsuit alleging that Amazon's advertising practices have overcharged its roughly 1.2 million advertisers by $20 billion from 2019 to the present.
The FTC contended Amazon didn't disclose reserve-pricing mechanisms that ultimately increased costs for advertisers and consumers.
Amazon responded by saying advertisers are receiving greater value from its platform.
Whatever the case, there may be fears that a lucrative profit center for Amazon — advertising — could become less lucrative in the future.
Lingering concerns about how much Big Tech is spending on AI infrastructure are also not helping Amazon's stock.
Recall that in its second quarter earnings release, Amazon announced it is significantly expanding its full-year 2026 capital expenditures budget to approximately $220 billion.
And the aggressive spending is poised to continue, Wall Street says.
"We now estimate Amazon's 2027 capex to be $320 billion, and its 2028 capex to be $370 billion. Accordingly, we now estimate negative free cash flow in 2027 and 2028 of approximately -$50 billion in each year," Evercore ISI analyst Mark Mahaney warned.
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