Why I Doubled Down on Amazon Stock

Parkev Tatevosian, CFA•Sep 25, 2026

Summary

Parkev explains his decision to significantly increase his position in Amazon (AMZN) shares, doubling his allocation to approximately 6% of his total portfolio. He identifies Amazon as a legendary company rarely available at a fair value, let alone a discount, making it an attractive long-term investment.

Parkev calculates Amazon's fair value at $306 per share, noting that he acquired shares closer to $250, well below the current market price of $258. This represents an estimated 20% upside potential over the next 12 to 18 months. He acknowledges the market's concern regarding Amazon's soaring capital expenditures, which are projected to result in a negative free cash flow of $40 billion this year due to over $200-$220 billion in investments, primarily for artificial intelligence (AI) infrastructure. However, Parkev believes investors are overestimating this risk.

His confidence stems from several factors:

**Shift in Investment Focus:** Historically, Amazon's capital expenditures were largely directed at supporting its e-commerce business, which traditionally operates with lower profit margins (under 10%). Since 2023, the majority of these investments are flowing into the Amazon Web Services (AWS) cloud segment, which boasts significantly higher operating profit margins (historically over 30%, recently approaching 40%). Parkev projects that by the end of this or next year, 50-75% of Amazon's total assets will be attributed to AWS.

**Improved Profitability:** By directing substantial capital into a segment that is at least three times more profitable than e-commerce, Parkev anticipates that Amazon's overall profit margins and return on capital will improve significantly.

**Industry Dynamics:** He notes that demand for AI and cloud infrastructure is currently outstripping supply. The new assets being built are expected to be almost fully utilized for their operational lifespan, with customers already lining up.

**Valuation Comparison:** Parkev finds Amazon's valuation compelling, trading at an expected price-to-earnings (P/E) ratio of 25. He highlights that this is considerably cheaper than competitors like Walmart (expected P/E of 33) and Costco (expected P/E of 36), while Amazon is also more profitable.

For these reasons, Parkev is confident that Amazon will achieve a return on its AI investments that significantly exceeds its weighted average cost of capital.

Mentioned Stocks

AMZN

Sentiment: BUYAction: BOUGHT

Reasoning: Parkev explicitly states he doubled his position in Amazon shares to about 6% of his portfolio because he views it as a legendary company currently trading at an attractive discount. He calculated a fair value of $306 per share and was able to buy shares closer to $250, suggesting a potential upside of approximately 20% over 12-18 months. Parkev acknowledges market concerns about Amazon's massive capital expenditures (estimated negative free cash flow of $40 billion this year due to $200-$220 billion in AI infrastructure investments) but believes investors are overestimating the risk. He argues that the majority of CapEx is now shifting from lower-margin e-commerce to the highly profitable AWS segment (historically >30% operating margins, nearing 40%), which will significantly improve Amazon's overall profitability and return on capital. He also notes that Amazon's valuation (expected P/E of 25) is more attractive than competitors like Walmart (33) and Costco (36), despite Amazon being more profitable.

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