Amazon's Current Valuation Presents Attractive Entry Point: Analyst

Amazon.com Inc. (NASDAQ:AMZN) is heading into its third-quarter report with investors weighing strong Amazon Web Services expectations against pressure from higher AI spending, data-center investment and a weaker broader market setup.Amazon shares fell nearly half a percent in Thursday trading as risk appetite weakened. Nasdaq futures dropped almost 1%, while S&P 500 futures declined 0.39%.AWS Growth Sets a High BarBNP Paribas analyst Nick Jones expects Amazon to post broad-based strength, led by continued momentum at AWS.Jones rates Amazon Outperform with a $355 price forecast, implying 39% upside from the cited $256.30 share price.He believes investors are looking for AWS revenue growth of 43% to 45%, well above the 38% consensus estimate. Jones also sees operating income closer to $28 billion, compared with the $25.9 billion consensus.Retail Business Tracks Near ExpectationsJones expects Amazon’s first-party and third-party retail revenue to remain roughly in line with consensus.Online stores and third-party seller services are tracking toward about 5% year-over-year growth.Fourth-Quarter Hurdle Remains HighFor the fourth quarter, Jones believes investors want the high end of Amazon’s guidance to reach $247 billion in revenue and $35 billion in operating income.Those figures would top consensus estimates of $244 billion in revenue and $33 billion in operating income.Jones also expects Amazon to raise its 2026 capital spending outlook by $5 billion to $10 billion as the company prepares for elevated investment in 2027.Data-Center Returns Stay in FocusJones said investors remain focused on margins and returns from Amazon’s data-center investments as spending stays elevated. Despite those concerns, he continues to view Amazon’s current valuation as an attractive entry point. See More: Top Value Stocks Earnings and Analyst OutlookAmazon’s next earnings report is estimated for Oct. 29, 2026.Analysts expect earnings of $1.95 per share, unchanged from a year earlier. Revenue is projected to rise to $202.04 billion from $180.17 billion.The stock trades at a price-to-earnings ratio of 20.9.Amazon carries a consensus Buy rating, with an average price forecast of $335. Recent analyst actions include: Tigress Financial: Maintained Buy and raised its price forecast to $385 on Oct. 6. TD Cowen: Maintained Buy and a $350 price forecast on Oct. 5. Rosenblatt: Maintained Buy and raised its price forecast to $360 on Sept. 30. ETFs With Significant Amazon ExposureAmazon also holds sizable positions in several exchange-traded products, including: First Trust Dow Jones Internet Index Fund (NYSE:FDN): 9.78% weighting. Eagle Capital Select Equity ETF (NYSE:EAGL): 8.71% weighting. MicroSectors FANG+ 3x Leveraged ETN (NYSE:FNGU): 9.76% weighting. Changes in investor demand for these products can influence trading activity in Amazon shares, although the impact depends on fund flows and portfolio rebalancing.Price ActionAMZN Price Action: Amazon.com shares were trading 0.38% down at $258.92 at the time of publication on Thursday, according to Benzinga Pro data.Image via Shutterstock Read Also: Amazon AI Boom: Analysts See AWS, AI Agents Driving Bigger Growth