Amazon Trades at 24x 2027 Earnings. Citizens Says It Should Be Worth 29x

Amazon.com, Inc. (NASDAQ:AMZN) has been given a Market Outperform rating by Citizens analyst Andrew Boone, with a target price of $315. The firm believes Amazon trades at a lower valuation than it should, citing its leadership in cloud computing through Amazon Web Services (AWS) as one reason. AWS currently holds an estimated 28% market share in cloud infrastructure and experienced a 37% year-over-year growth in net sales to $42.2 billion in Q2 2026.

Operating income for AWS grew to $16.6 billion, accounting for an estimated 60% of Amazon's operating income and one-fifth of its revenue. Additionally, AWS has a custom silicon revenue run rate of over $25 billion and an AI-specific revenue run rate of over $25 billion. On the retail side, North America segment sales rose 16% to $116.2 billion, with operating income climbing to $9.1 billion.

However, Amazon's growth trajectory comes with costs, as the company raised expected 2026 capital expenditures to $220 billion, leading to a trailing twelve month free cash flow of $7.6 billion. Despite this, Amazon sees significant hedge fund interest, with 369 hedge funds holding positions in the stock as of the second quarter of 2026.

Citizens' 29 times earnings multiple for Amazon becomes more justifiable if its AI infrastructure spend effectively translates into sustained, high-margin AWS growth. However, the free cash flow outflow is a clear concern for the stock. While potential benefits of Amazon as an investment are acknowledged, Citizens believes that certain AI stocks offer greater upside potential and carry less downside risk.