Summary

• In my view, $15B in Amazon.com, Inc.'s AWS AI services ARR is not enough to justify a $200B FY26 CapEx plan. At least, not yet.
• I want to see AWS AI services ARR increase significantly over the next few quarters, since it still represents only 10% of AWS’s run rate.
• AWS grew 24% in Q4, and I want to see Q1 revenue coming in clearly above the $36.8B consensus.
• I see the 34x forward earnings multiple for AMZN stock as hard to defend when Alphabet trades at 29x and Google Cloud is growing at a faster rate.
• I am downgrading AMZN to Hold heading into the print, though I may reconsider if AWS revenue obliterates expectations and Q2 operating income guidance suggests an expansion.

Over the last 4 weeks, Amazon.com, Inc. (AMZN) has outperformed the rest of the hyperscalers to the point that the stock has now re-rated at 34x next year's earnings.

That’s a rich multiple for a

13.47K Followers

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.