Amazon Web Services Regains Momentum Amid AI Boom, Stock Seen as Undervalued
Amazon's cloud division is reclaiming its leadership position through aggressive AI infrastructure investments. The company recently reported its fastest AWS growth in years, followed by a landmark $38 billion cloud services deal with OpenAI. This partnership may extend to Amazon's proprietary Trainium chips, positioning the company as a viable alternative to Nvidia in the AI hardware race.
Despite these developments, Amazon shares remain discounted relative to peers. The stock trades at 24x forward earnings—a significant discount to its five-year average of 36x and below multiples of Apple, Microsoft, and Alphabet. This valuation gap persists after seven years of underperformance, including a mere 5% gain in 2025 versus the Nasdaq 100's 20% rally.
Market observers draw parallels to Alphabet's resurgence, suggesting Amazon could be poised for similar multiple expansion. The AI-driven cloud acceleration comes as enterprises globally commit unprecedented capital to data infrastructure, with AWS positioned as a primary beneficiary.