Amazon Grew Revenue 20%. Here's the Only Reason I Can Think Of for Why Amazon Trades at Just 22 Times Forward Earnings.

Despite Amazon's 20% revenue growth and accelerating AWS performance, the stock trades at a modest 22x forward P/E ratio due to investor concerns about massive capital expenditure spending. The company plans to spend $220 billion on capex in 2026 (up from $132 billion in 2025), driven by AI infrastructure and memory chip costs. This has strained the balance sheet, turning free cash flow negative at -$7.6 billion TTM and increasing long-term debt by 96% to $129 billion. However, strong revenue acceleration and high liquidity suggest the valuation may be an overreaction.