Is Amazon Stock Undervalued at a P/E Ratio of Twenty?

Yahoo Finance ·

Amazon.com (AMZN) shares are currently changing hands at 20.5 times their earnings calculated over the trailing twelve-month period ending in June 2026. Notably, these earnings figures surpassed the tech giant's operational profits. During the single quarter concluding in June 2026, the company posted a net income of $62.6 billion, contrasting with an operating income of $27.5 billion.

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An analysis suggests that Amazon (AMZN) is trading at a price-to-earnings ratio of 20.5x based on trailing 12-month performance as of June 2026. Notably, net income reached $62.6 billion during this period, significantly exceeding the operating income of $27.5 billion, marking robust performance. These indicators suggest the market may be underestimating Amazon's actual earnings power. Investors need to closely examine the company's improved profit structure and valuation attractiveness.

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Amazon's net income significantly exceeding operating income implies contributions from diversified revenue sources, such as investment asset valuation gains and cost reductions. A P/E ratio of 20.5x can be evaluated as an attractive level compared to the average of Big Tech companies.

If earnings growth continues, a stock price increase through valuation rerating (bullish scenario) is expected, but if consumer sentiment contracts due to macroeconomic deterioration, a slowdown in earnings momentum (bearish scenario) is a concern. Attention should be paid to the divergence trend between quarterly net income and operating income going forward.

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