Is The Market Underpricing Amazon Stock At Twenty Times Earnings?
Amazon.com (AMZN) stock trades at 20.5 times earnings for the twelve months to June 2026. Those earnings actually exceeded the company’s operating profit. In the quarter to June 2026 alone, net income was $62.6 billion against operating income of $27.5 billion. The scenario grows all of those earnings, including the part from outside the business. Amazon’s multiple is well below the 41.2 average recorded at the stock’s last 12 fiscal quarter ends, partly because those earnings were so high. So is the market underpricing Amazon, and what would the stock be worth in three years if its business grew and the multiple stayed put?
What Could Amazon Stock Be Worth At Today’s P/E?
Under a few Trefis assumptions, Amazon stock would be worth about 34.7% more in three years at today’s P/E. This scenario models revenue growing a little slower than it did in the twelve months to June 2026. The operating margin ends nearer today’s level than its lower past average. Here is Amazon today beside the scenario three years on:
All of that gain would come from Amazon’s business, none from a higher multiple. The scenario holds the P/E at today’s level, which sits well below its old average. Within the business operations, the gain comes from Amazon selling more. Yet part of that progress is lost to the slightly lower margin.
Is Recent Growth Ahead Of The Scenario’s Pace?
Amazon’s revenue grew 15.8% in the twelve months to June 2026, outpacing the scenario’s 13.4% a year. Growth accelerated in the quarter to June 2026. It reached 19.6%, against 13.3% in the same quarter of 2025. Management’s only revenue guide is for the quarter to September 2026. They expect growth of 9% to 12%, which falls below the scenario’s yearly pace.
Amazon reports three segments: North America, International and Amazon Web Services (AWS). AWS grew fastest in fiscal 2025. It expanded by 19.7%, up from 18.5% in fiscal 2024. North America is the largest segment and grew 10.0% that year. At that rate, the other two segments would need to grow faster than the scenario’s pace. International grew 13.3% in fiscal 2025, just under it, so AWS would carry most of the load.
Amazon Stock With Weaker Revenue, Margins Or P/E
In each row below, one assumption differs from the scenario while the rest stay as they are:
Amazon starts from a high margin. It stands at 12.1% today, against a 9.0% average at quarter ends from June 2023 to March 2026.
The scenario also holds the share count at today’s level. Yet Amazon’s diluted count rose 4.3% in the three years to June 2026. With more shares, each one would get a smaller part of the gain.
Taken alone, revenue growth could slow from 15.8% in the twelve months to June 2026 to 2.7% a year before three years of owning the stock return nothing. On those same terms, the operating margin could fall from 12.1% today to 8.3%. The P/E could fall from 20.5 today to 15.2.
Looking ahead, Amazon’s revenue growth for the quarter to September 2026 is the measure to watch in the report expected on or around October 28, 2026.
How To Act On AMZN?
Now you know AMZN better. And that’s our purpose: to make you informed before you invest your money. However, making a bet on a single stock carries its own risks.
There is a smarter choice. Since its inception, the Trefis High Quality (HQ) Portfolio has beaten the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking.
If you’d rather act on AMZN itself: