Amazon Stock Analysis: Buy or Sell? | AMZN Stock Earnings Analysis

Parkev Tatevosian, CFA•Aug 1, 2026

Summary

Parkev analyzes Amazon's Q2 2026 results, noting that total revenue grew 20% to $200 billion, which exceeded both management's forecasts and market expectations. The primary driver of this performance was the AWS cloud segment, which saw growth accelerate for the third consecutive quarter to 37%, reaching $42.2 billion. Parkev emphasizes that AWS operating margins also improved to 39.4%, suggesting that this growth is organic and not driven by heavy discounting. Parkev believes these results justify Amazon's massive capital expenditure plans, which are projected to reach $200 billion this year.

While the income statement was strong, Parkev highlights a concern regarding cash flow. Amazon spent $54.2 billion on property and equipment in the quarter, which outpaced its $45.4 billion in operating cash flow, resulting in negative free cash flow. Parkev notes that the company has already reached negative $27 billion in free cash flow for the first half of 2026. However, Parkev points out that Amazon's $120 billion cash reserve and low cost of debt make this aggressive investment strategy manageable for the next few years.

AMZN: Parkev highlights that Amazon's internal AI chip business, including Trainium and Graviton, has reached a $25 billion annualized revenue run rate and continues to grow at triple digits. Parkev notes that major AI players like OpenAI and Anthropic are making multi-year commitments to use Amazon's proprietary hardware, which reduces Amazon's reliance on third-party suppliers. Parkev reiterates that Amazon is one of the best stocks to buy right now and views the current price action as a justified buying opportunity.

NVDA: Parkev discusses how Amazon's progress with its proprietary Trainium and Graviton chips creates increasing competition for Nvidia. Parkev explains that as large AI labs shift some of their training and inference workloads to cloud-provider-specific chips, it may come at the expense of Nvidia's market share. Parkev maintains a diversified position in both companies to hedge against which specific hardware architecture ultimately wins the AI race.

PLTR: Parkev compares Amazon's new $1 billion investment in 'forward deployed engineers' to the successful business model utilized by Palantir. Parkev argues that providing hands-on expert teams to help small and medium-sized enterprises deploy agentic AI solutions will be a significant future growth driver for Amazon. Parkev suggests that this strategy mimics Palantir's effective approach of embedding engineers directly with customers to co-develop solutions.

Mentioned Stocks

AMZN

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev views Amazon as one of the best stocks to buy now due to accelerating AWS growth (37%) and expanding margins. Parkev argues that despite negative free cash flow from AI spending, the $25 billion run rate in proprietary chips and strong advertising growth make it a compelling long-term investment. Parkev explicitly reiterates his recommendation to buy the stock following these results.

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NVDA

Sentiment: HOLD

Reasoning: Parkev notes that Amazon's successful monetization of its own AI chips (Trainium and Graviton) increases competition for Nvidia. While Parkev owns Nvidia stock, he notes that major AI labs are increasingly willing to use cloud-provider chips, which might come at the expense of Nvidia. He views a diversified holding as the best strategy rather than relying solely on Nvidia.

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PLTR

Sentiment: HOLD

Reasoning: Parkev mentions Palantir as a positive strategic comparison, noting that Amazon is adopting Palantir's 'forward deployed engineer' model to help enterprises implement AI. Parkev believes this hands-on service model is highly effective for monetization, though he does not provide a specific buy/sell recommendation for Palantir in this video.

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