T
TubeFolio
Back to Dashboard

Amazon Stock: The Big Winner of AI (Completely Misunderstood in 2026)

Tom Nash•May 10, 2026

Summary

Tom's main thesis is centered on the 'rubber band effect,' where a company's fundamentals improve drastically while the stock price remains stagnant, eventually leading to a violent upward correction. He points out that Amazon has underperformed the S&P 500 by 13% over the last five years, yet its revenue has doubled to $716 billion and its operating margins have doubled to 11.6%. Tom highlights that the stock is trading at a forward PE of 24 and 3.4 times sales, which is significantly lower than its 2020 valuation of 56 forward PE and 4 times sales.

Tom explains that Amazon has evolved from a simple online retailer into a profit machine driven by five engines: consumers, sellers, advertising, cloud infrastructure (AWS), and automation. He emphasizes the importance of the $100 billion deal with Anthropic, which provides concrete demand for Amazon's infrastructure and its proprietary Trainium chips. By developing its own silicon, Amazon is becoming a vertically integrated cloud provider similar to Google, which Tom believes will reduce costs and improve margins. He predicts that AWS alone could generate between $69 billion and $85 billion in operating income within the next three years.

AMZN: Tom views Amazon as a high-conviction buy due to the massive disconnect between its fundamental growth and its market valuation. He specifically cites the shift toward high-margin AWS and advertising revenue as a primary catalyst for future gains. Tom predicts the stock will deliver 100% to 130% returns over the next five years, provided the AI trend remains real and the macroeconomy stays stable.
PLTR: Mentioned as part of Tom's historical track record of successful picks that have helped build his wealth. He uses this stock to illustrate his methodology of finding companies with improving margins and revenue growth that the market has not yet fully priced in. There is no specific new price target or current analysis provided beyond its status as a past successful recommendation.
NVDA: Cited as another example of Tom's past successful investments based on his strict methodology of following business fundamentals. He notes that while he has made significant gains on this stock, his current focus is on finding similar setups where the price lags behind the business improvement. No specific current entry points were discussed in this video.

Mentioned Stocks

AMZN
Sentiment: BUYAction: RECOMMENDED

Reasoning: Tom believes Amazon is undervalued because its stock price has lagged the S&P 500 by 13% over five years while its net income quadrupled and revenue doubled. He points to a lower valuation (24 forward PE vs 56 in 2020) and a shift toward high-margin segments like AWS and advertising. He highlights the $100B Anthropic deal and vertical integration via Trainium chips as major drivers. He predicts returns of 100-130% over the next 5 years.

Loading chart...