Amazon.com (AMZN): fair value

Fair-value band

The normal range for this name runs from $248 (cheap) to $306 (expensive); it is now priced at $262.

That is 0.8σ below this name's own normal premium.

Is Amazon.com undervalued?

Fair, relative to its own history. Amazon.com trades at $262, 4% above the fair value this model estimates, but it has habitually traded 10% above fair value, and today's gap is 0.8σ below that norm, within the range it normally trades in, so the verdict is Fair: priced normally for itself, not necessarily fairly valued.

Diligence checklist

7 pass · 1 fail · 3 no data

• PASSCash actually collected from profit, last 12 months: 188%XBRL · Amazon gets $1.88 of real cash for every $1 of reported profit which means profits are real and not just numbers on paper. That's a good sign.
• PASSGap between paper profit and real cash: -2.9%XBRL · Amazon's "profit on paper" and "cash in the bank" gap is small enough to pass.
• PASSDebt compared to one year of cash earnings: 0.21xXBRL · Amazon could pay off everything it owes, net of the cash it holds, with 0.21 of a single year's earnings. My limit for a name I would buy is three years, so debt is not a risk here.
• PASSHow much more it earns on capital than that capital costs: +4.91ppXBRL · Amazon earns 4.9 points more on the capital it employs than that capital costs. That clears the bar, but only just: a slightly worse year or a slightly higher cost of money and this business is running to stand still. The gap is wider than it was at the start of the window.
• PASSStock sold by executives and directors on the open market, last 6 months: $0.0MEDGAR · Nobody running Amazon sold a single share on the open market in the last 6 months. That is the alignment I want: the people with the most information about the business are keeping their money in it. A further $416.7M went out under pre-planned 10b5-1 schedules, which I don't count: those sales are set up months ahead and say nothing about what management thinks today. Options being exercised, and shares held back to cover the tax on them, are not sales and I don't count them either.
• PASSHow long the CEO has run this company: 5.3 yearsTEXT · Amazon's chief executive has held the job since July 2, 2021, which is 5.3 years and covers a full cycle: good years and bad ones, both on this person's record. That is long enough for the record to mean something. Time served isn't the same as doing the job well, though, so read this next to the return-on-capital line above, which covers the same years. filing ↗
• N/AProfit margin held up during the last sales slump: n/aXBRL · There's no revenue downturn in Amazon's filed record, or gross profit isn't tagged, so this test has nothing to measure. It needs a bad patch to look at: without one, whether customers would stay through a price rise is untested rather than proven.
• FAILNormal profit margin across a full business cycle: FCF margin -1.2% vs 1.2% medianXBRL · Amazon is earning a -1.2% cash margin against a long-run average of 1.2%, 200% worse than normal. Either this is a trough the business climbs out of, or the average no longer describes it. My valuation grows the average, so it assumes the first: if that's wrong, the value on this page is too high. Across the window the margin ran between -5.8% in June 2022 and 8.3% in June 2024.
• N/AHow much of the stock trades on an average day: $9,193MMARKET · Amazon trades so much volume that this basically isn't a concern. There's no pass or fail here because the answer depends on how big a position I'd actually want to take.
• N/AShare of revenue from its single biggest customer: not establishedTEXT · I fetched and read Amazon's February 6, 2026 10-K but found no sentence about customer concentration. That isn't the same as the filing saying there is none: it may simply be worded in a way my search doesn't catch. Read Item 1 and the concentration-of-risk note yourself before trusting this row. filing ↗
• PASSWhether the company switched auditors in the last 2 years: noneEDGAR · Companies sometimes switch accounting auditors right before something bad is uncovered which can be a warning sign. Amazon hasn't changed auditors in the last 2 years, so there's no such red flag here.