Amazon.com, Inc. (AMZN): A Bull Case Theory

We came across a bullish thesis on Amazon.com, Inc. on Capitalist Letter’s Substack by Oguz Erkan. In this article, we will summarize the bulls’ thesis on AMZN. Amazon.com, Inc.'s share was trading at $233.88 as of December 1st. AMZN’s trailing and forward P/E were 33.03 and 29.59 respectively according to Yahoo Finance.

Amazon has doubled its operating cash flow since 2020, yet the stock has risen only 40%, compressing its price-to-operating cash flow ratio from 25x to 19x. This indicates that Amazon has grown into its prior overvaluation, suggesting the stock’s premium is no longer excessive. Despite this, shares have remained flat as investors question Amazon’s position in the AI race. The concern stems from AWS lagging its hyperscaler peers in growth, even trailing Alibaba Cloud. The shortfall reflects Amazon’s strategic decision to develop its own AI chips instead of relying heavily on Nvidia GPUs—a move that temporarily slowed AI infrastructure capacity expansion.

However, this dynamic is set to shift. With Anthropic’s two gigawatt-scale AWS clusters commencing operations this quarter, AWS growth is projected to reaccelerate above 25%. Success with these Trainium-based clusters could attract other AI labs seeking cheaper, scalable compute solutions, positioning AWS for sustained 20% annual growth over the next five years. At that rate, AWS could reach $305 billion in revenue by 2030, generating over $90 billion in net income—valuing the segment alone at $2.3 trillion at 25x earnings, roughly Amazon’s current market cap.

The remaining businesses, producing $551 billion in revenue today, could deliver $127 billion in net income and be worth an additional $2 trillion. Discounted at 10%, Amazon’s intrinsic value would be around $2.6 trillion—about 10% above current levels. Given its scale, profitability, and strategic positioning, Amazon appears fairly valued and an attractive long-term holding.

Previously we covered a bullish thesis on Amazon.com, Inc. (AMZN) by FluentInQuality in May 2025, which highlighted AWS’s strength, Amazon’s logistics moat, and advertising growth as core drivers. The company’s stock price has appreciated approximately by 12.09% since our coverage. This is because the thesis played out as AWS and ads expanded. The thesis still stands as Amazon remains a multi-engine growth platform. Oguz Erkan shares a similar but emphasizes on AWS’s AI-led reacceleration and valuation upside.

Amazon.com, Inc. is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 335 hedge fund portfolios held AMZN at the end of the second quarter which was 328 in the previous quarter. While we acknowledge the potential of AMZN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.