Parkev Tatevosian, CFA on $AMZN (Nov 5, 2026)

Amazon generated $202 billion in revenue in the last quarter of the year, a 12% increase compared to the same quarter last year. To increase its appeal, its operating profit rose by 61% year-on-year to more than $28 billion.

Overall, it was a remarkable quarter , but it did not live up to investors' expectations.

So, investors are asking: "What's going on with Amazon? Why isn't the stock price rising more despite these positive results?" Therefore, I wanted to review the details of Amazon's last quarter and offer my perspective on why its stock price did not rise after these results.

Amazon's revenue and operating income are increasing , and impressively, its operating income has increased fivefold compared to its revenue. This is considered the best among giant cloud computing companies in terms of the leverage it demonstrates.

I spoke about this and predicted it would happen. The reason I predicted this for Amazon is that while the company’s overall revenue increased by 12%, it increased by 39.3% in the Amazon Cloud Services (AWS) sector.

This sector is by far the most profitable for the company, with operating profit margins in this sector approaching 40%. Therefore, as Amazon's revenues from this more profitable sector increase, its operating profitability is growing at a faster pace than revenue growth.

The good news for Amazon stock investors is that this is likely to continue for several more years, as the company is spending hundreds of billions of dollars to expand its production capacity in this particular sector, where most of its investments are directed .

Demand for this category exceeds supply , and this situation is likely to remain so for at least a year and a half or two years.

Further evidence of this is that Amazon's backlog of orders for AWS services has grown by triple digits year-over-year to more than $578 billion. These are orders that Amazon has received and will eventually turn into revenue.

So, the results are excellent, and this is the kind of result I, as a shareholder, would hope for to justify the company spending hundreds of billions of dollars in a particular category.

But why isn't the stock price rising despite these results? I have several reasons to think so. Firstly, the market is skeptical of this huge backlog of orders . The companies that are signing these contracts are Anthropic, OpenAI, and others, and the market is skeptical about these companies' ability to pay and fulfill these contracts.

The market is concerned about the possibility of these companies canceling, postponing, extending, or even paying for the contracts in a different way instead of paying the amount in cash to Amazon.

This is one of the reasons why Amazon's stock has not responded to these developments.

Second, Amazon needs to spend hundreds of billions of dollars this year, and possibly next year, and possibly the year after, to generate this revenue. It does not have the product or service necessary to generate this $600 billion in revenue.

She doesn't have everything she needs . If they don't build this project, they are unlikely to generate this much revenue . Therefore, investors are not very impressed because they have to spend hundreds of billions of dollars to expand the scale of the business.

I'll give you this example: You have one restaurant that makes $10 million . But the restaurant owner says: "Next year, we will make $20 million." You might say, "Wow, that's excellent!

You're doubling your profits." But what if the restaurant owner told you: "Yes, but next year we will also be adding five more branches"? So, yes, they are doubling their income, but they also added five times the number of branches to achieve this increase.

So it's not quite that extreme with Amazon, but here's the point: they need to invest in much more income-generating assets to achieve this revenue increase.

Investors are most impressed when a company generates revenues higher than its current assets and production capacity, and is able to expand without the need for large additional investments.

So, I think these are some of the reasons why Amazon's stock price is n't rising as much as expected given its performance.