Amazon: The Window To Buy At 10-Year Lows Is Slamming Shut

The stock market has long treated Amazon as a paradox: a company whose valuation metrics have swung wildly between extremes, yet whose underlying business has consistently defied skeptics. As of January 2026, Amazon's price-to-earnings (P/E) ratio stands at 34.79, a stark departure from its 10-year historical average of 104.22. This collapse in valuation-driven by a surge in earnings relative to its stock price-has created a rare inflection point for investors. But with the company's e-commerce and cloud computing divisions showing no signs of slowing, the question is no longer if Amazon is undervalued, but how long this window will remain open.

Valuation Inflection: From Sky-High to "Cheap" in a Year

Amazon's P/E ratio reached an absurd peak of 251.93 in March 2023, fueled by speculative optimism and artificially low earnings per share. By Q4 2025, the metric had plummeted to 30.34, its lowest level in a decade. This 87% drop in the P/E ratio reflects a fundamental shift: Amazon's earnings have grown far faster than its stock price. For 2024, the company's P/E averaged 38.76, a 24.75% decline year-over-year.

This compression in valuation metrics is not a sign of weakness but a correction. Amazon's trailing 12-month revenue hit $691.33 billion as of September 2025, a 11.48% year-over-year increase. Over the past decade, its revenue has grown at a compound annual rate of roughly 14.72%. Such consistent top-line expansion-coupled with a P/E ratio now below 35-positions Amazon as one of the most attractively priced tech giants in years.

E-Commerce: The Engine of Enduring Growth

Amazon's e-commerce dominance remains its bedrock. From 2020 to 2025, its annual revenue surged from $386.06 billion to $691.33 billion. Even in 2021, when the global economy was still reeling from the pandemic, the company posted a 21.7% revenue increase. This resilience stems from its unparalleled logistics network, Prime membership ecosystem, and ability to adapt to shifting consumer behaviors.

Critics argue that e-commerce growth is slowing, but Amazon's performance tells a different story. Its 11.48% year-over-year revenue growth in the trailing 12 months (as of September 2025) outpaces the broader retail sector's average of 6-7%. The company's focus on international expansion, particularly in India and Southeast Asia, and its push into AI-driven retail (e.g., cashierless stores and personalized recommendations) suggest this momentum will persist.

AWS: The Cloud's Unstoppable Force

While e-commerce anchors Amazon's present, its future lies in the cloud. Amazon Web Services (AWS) has maintained a 31% global market share in cloud infrastructure as of Q1 2025, outpacing Microsoft Azure (21%) and Google Cloud (12%). This leadership is not accidental. AWS's Q4 2024 revenue hit $187.8 billion, a 19% year-over-year increase.

What's more, AWS is investing aggressively to cement its dominance. In 2026, the division plans to spend up to $50 billion to expand AI and supercomputing infrastructure for U.S. government customers. This includes deploying 1.3 gigawatts of compute capacity across secure data centers and integrating cutting-edge tools like Amazon SageMaker and Anthropic Claude. Such investments align with the U.S. government's AI Action Plan and position AWS to lead in high-margin, high-impact sectors like cybersecurity and drug discovery.

The Closing Window: Why Now Is Critical

Amazon's current valuation-particularly its P/E ratio-represents a rare discount for a company with such robust growth prospects. However, this window is closing rapidly. The $50 billion AWS investment alone could catalyze a new earnings cycle, driving up the P/E ratio as markets reprice the stock. Meanwhile, the company's e-commerce division continues to generate cash flow, which could be reinvested into AI, robotics, or even new business lines.

For investors, the calculus is clear: Amazon's valuation inflection point is a temporary anomaly, not a permanent state. The company's ability to innovate in both e-commerce and cloud computing ensures that its earnings-and thus its P/E-will rise again. The question is whether investors will act before the window slams shut.