Amazon Is Absurdly Undervalued At <12x EV/EBITDA

Shares of Amazon have taken a hit recently, caught between investor anxiety and broader macroeconomic turbulence. Despite the current market concerns, in my view, Amazon remains one of, if not the greatest companies in the world.

Investor nerves are frayed by a combination of factors, notably Amazon's hefty $100 billion capital expenditure plan for 2025 and the ripple effects of President Trump's aggressive tariff strategy.

With tariffs on Chinese imports soaring as high as 145%—and even reaching an extraordinary 245% on certain products like electric vehicles—the market fears significant disruptions to Amazon's global supply chains and extensive third-party seller ecosystem.

Yet this fear-driven selloff has created an intriguing anomaly: Amazon, the e-commerce and cloud powerhouse, now trades at a lower EV/EBITDA multiple (11.4x) than even Walmart (18.3x).

The pricing disconnect is somewhat ironic given that certain aspects of these tariffs could actually benefit Amazon's AWS and AI businesses as US-based companies developing their own AI chips may gain advantages in the new trade environment.

Moreover, while Walmart recently clocked modest revenue growth of 4.1%, Amazon's performance was far stronger, delivering double-digit expansion across the board—including an impressive 19% year-over-year surge in AWS.

This stark contrast in future earnings potential—analysts forecast Amazon's net income to reach $79 billion by 2026 versus Walmart's $24 billion—highlights just how dramatically undervalued Amazon appears.

The market's fixation on short-term tariff impacts and capital expenditures has created a compelling opportunity for patient investors. At under 30x forward P/E and with free cash flow potentially reaching $100 billion annually by 2026, Amazon is priced more like a mature retailer than the remarkable growth engine it continues to be.