The Compound on $AMZN (Oct 27, 2026)

Yeah, we'll get the Microsoft and Alphabet reports tomorrow after the close, but we'll get the Amazon report on Thursday, and that's what I want to focus on because ...

I love...first and foremost, I personally own this stock. Yeah, most of you own it because it's in, you know, an exchange-traded fund you own or something , but this stock has been forgotten for a long time.

It's...it's good. It has increased during the year. It's not...it doesn't excite anyone, and... it's just ordinary. But I like the setup. And in the last quarter when they announced their results, the July quarter was fantastic.

Amazon Web Services' growth accelerated from 24% to 37% quarter after quarter, and yeah, that's what's really moving the stock, as I'm going to explain.

This first graph showed me . I am showing you the stock price over three years, and the staircase pattern at the bottom is the earnings per share. This company's earnings per share have completely exploded, and the share price has given you nothing as a result .

And I like that setting because sometimes in the markets and in life , there is a delayed reaction. You don't always get recognition for what you do at the same moment. We've seen it with technology stocks, and we've seen it in our own lives.

This is just...this is part of the deal. Sometimes you have to work hard in the dark before someone says, " Wow, that guy's doing something real." And I think this applies to Andy Jassie.

His hair is really growing back , that damn thing. That's why I didn't get much appreciation for my hair until this summer when it turned white in the sun, and suddenly people noticed.

Yes, the following graph. This is the price versus the delayed cash flow , and I am showing it to you for a reason that I will now explain. But what I want you to look at is the comparison between Amazon, Alphabet, and Microsoft.

Amazon is represented in light blue. It is now selling at a price-to-earnings ratio, over the past twelve months , of 16.6 times. Microsoft's score is 20.9, and Alphabet's is 21.6.

So, among the three largest cloud computing companies in the world, this is the lowest multiple paid by investors by a significant margin. And I think I know why. I believe this is the most realistic and tangible activity among the three companies.

It has a business in stores and merchandise. She has trucks and vans roaming my neighborhood day and night . It has logistics and facilities. It has robots, millions of robots.

It has physical objects that hinder the multiplier because it is probably more capital-intensive than others. I believe this price discount is unjustified. I believe it is an undervalued stock , and not just because I own it.

I just think people don't give this company the credit it deserves.

Let me explain why this might finally come to a head on Thursday night. They will announce their results, and let me read this. It is cheaper than Alphabet and Microsoft by this standard.

AWS growth and backlog of orders exceed capital expenditure. This is the essential point. Amazon Web Services (AWS) revenue increased by 36.7%. Backlogs of orders jumped last quarter from $200 billion a year ago to $496 billion.

Backlogs of orders mean future revenue growth , right? Their proprietary chips and cheap borrowing are two reasons why this company's capital expenditure is in itself a competitive advantage.

So, if you're worried about CoreWeave with its bonds trading at around 15-16% and you think credit is going to get tighter for cloud startups, then Amazon's advantage looks more appealing to stock buyers.

I want to share this analysis from Joseph Montezum, who writes in "Seeking Alpha," because I think he has hit the nail on the head regarding what drives Amazon's stock. He looked at the last five earnings reports and said that the mechanism by which the stock reacts, up and down , is how much AWS growth Amazon actually achieves against all the capital expenditure it pumps into that business.

So, it went back to August 2025. AWS revenue grew by 17.5%, while Azure was growing by 39% and Google Cloud by 32%. Smaller in size. Amazon had just spent $ 31 billion in that quarter, more than the other two had spent together.

When they announced the results, the stock fell by 7%. Three months later, the story was completely different. AWS's growth accelerated to 20%, its fastest growth rate since 2022, and they were recognized for it.

The stock jumped 13% after the report. He says, " This is it." February is the most significant month for me. AWS grew by 24% and exceeded estimates, which would normally have been good enough, but management directed nearly $200 billion in capital expenditures in 2026, a third more than the market expected, and they sent the stock down 10% the next day.

So, what is the situation before Thursday? It's a positive situation. AWS achieved growth of 28% in April and 37% in July. The July report sent the stock soaring 15% even as another $20 billion was added to the capital expenditure plan, while backlogs of work exploded .

So, what the market consistently penalizes is spending that precedes growth, but what we should see this quarter is growth that exceeds spending.

Meanwhile, re-present the graph , the first graph. I think he is on alert. I mean , if Jassi succeeds, we don't know what the numbers will be. If Jacey succeeds in delivering, keeps a cap on capital expenditure guidance as Meta did, and proves that AWS revenues outperform spending, the stock price could reach $275.

What are your thoughts? I like the situation too. The gap has mostly held. And I love that. Good. So, you're optimistic with me. Me too. So, we will either sink together or we will both look like geniuses.

We will ascend. We will ascend. We will find out next Tuesday evening. We will ascend.