At 21x earnings, Amazon is cheaper than Walmart and surging Harry Jones Fri, November 13, 2026 at 2:30 AM EST 5 min read AMZN +0.82% WMT +0.25% NVDA +2.53% META +0.73% MSFT -2.43% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
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Investing.com — Big Tech has spent the past month under the cosh as investors punish multi-billion-dollar artificial intelligence infrastructure budgets, sending NVIDIA (NASDAQ:NVDA), Meta Platforms (NASDAQ:META), and Microsoft (NASDAQ:MSFT) down 23.2%, 15.4%, and 3.7%, respectively, over the past 30 days.
Yet Amazon.com (NASDAQ:AMZN)—the e-commerce and cloud giant at the center of the Anthropic boom—has pulled away from the group, gaining 10.74% since November 1 to trade near $266.17.
The market is pricing Amazon's spending like its peers' speculative budgets, and the backlog says that is the wrong comparison. Yet Amazon is building against contracted demand: Amazon Web Services (AWS) carries a $578 billion backlog, and Anthropic has committed at least $110 billion in cloud spend with Amazon through 2036. At 21.4 times trailing earnings, the market still values that franchise below legacy brick-and-mortar retailers Walmart (45.2x) and Costco (52.2x).
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Amazon's moat is cost on both sides of the business: its own chips lower what AI customers pay AWS, and its robots lower what each order costs to deliver. AWS captures frontier AI demand through its own Trainium chips and the Bedrock inference service rather than relying solely on third-party GPU markups, and its custom silicon saved customers more than $2 billion in the third quarter alone. On the retail side, more than 1 million robots across the fulfillment network have cut cost-to-serve for the fourth consecutive year, while advertising adds a high-margin layer on top of every transaction.
Third-quarter results confirmed that the AI demand is real and accelerating. AWS revenue climbed 39.3% year-over-year to $46 billion, its sixth consecutive quarter of acceleration, on a 38.7% operating margin. Group revenue rose 12% to $201.9 billion, while operating income surged 61% to $28.1 billion for a record 13.9% operating margin. Advertising revenue grew 12% to $19.6 billion despite a Prime Day timing shift, and management expects a return to high-teens growth in the fourth quarter.
That profitability converts into heavy operating cash flow, which reached $168.3 billion over the last twelve months. Amazon is reinvesting all of it, and more, into capacity. Third-quarter capital expenditures totaled $75.9 billion, full-year 2026 spending is set at roughly $220 billion, and management has guided to higher spending in 2027. The company pays no dividend, and the buildout has pushed free cash flow into negative territory.
Wall Street has stayed firmly bullish through the post-earnings volatility. Shares tumbled about 10.1% after third-quarter EPS of $1.89 missed the $1.96 consensus, yet nearly every broker that updated after the report reiterated a Buy—including Goldman Sachs at $370 and BMO Capital at $390—with DA Davidson the lone Hold at $250. Analysts maintain a median price target of $326.99, with a high of $405 and a low of $230.
InvestingPro's Fair Value models—which aggregate multiple discounted cash flow approaches—place intrinsic value at $290.88 per share, 9.28% above the current price and more conservative than the Street's $326.99 median. The multiple has compressed sharply as earnings scaled, with the forward P/E falling from 78.2 times in fiscal 2023 to 20.6 times for fiscal 2026, while a PEG ratio of 0.29 puts the growth on offer at a steep discount. Beyond the operating business, Amazon's stake in Anthropic would be worth about $271.8 billion if the IPO prices at the top of its $78-per-share range.
The primary risk is the spending itself. The capex program has turned free cash flow negative and lifted total debt to $304.8 billion from $178.5 billion at the end of 2025, while CFO Brian Olsavsky has warned that AI workload mix and memory costs will cause AWS margins to fluctuate. A federal antitrust trial set for March 2027 adds regulatory overhang.
Before buying an 11% rally, investors must weigh AWS's accelerating growth against a $220 billion capital spending bill. AWS operating margins, custom AI chip deployment schedules, and advertising cash-flow contribution are detailed inside the Amazon.com Pro Research Report.
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Big Tech's AI budgets will keep drawing scrutiny, but Amazon has shown that its spending is backed by signed customer commitments and an accelerating cloud business. Its next test is turning that capacity into free cash flow once the buildout peaks.
Relying on a single mega-cap while AI infrastructure budgets face investor scrutiny leaves capital exposed to one company's spending cycle. Rather than attempting to guess which tech giant will survive the next guidance reset, InvestingPro's data-driven strategies evaluate thousands of balance sheets every month to isolate companies converting structural demand into verified cash flow.
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Disclosure: The author holds no position in the stocks mentioned. Data and financial metrics as of November 12, 2026.
At 21x earnings, Amazon is cheaper than Walmart and surging
