Buy or Sell Amazon.com Stock?

We believe there is not much to fear in AMZN stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced.

Below is our assessment:

If you seek an upside with less volatility than a single stock, consider the High Quality Portfolio (HQ) – HQ has outperformed its benchmark – a combination of S&P 500, Russell, and S&P midcap index, and achieved returns exceeding 105% since its inception.

Let’s get into details of each of the assessed factors but before that, for quick background: With $2.4 Tril in market cap, Amazon.com provides retail sales of consumer products and subscriptions globally, operates in North America, International, and cloud services, and manufactures electronic devices like tablets, TVs, and smart home products.

[1] Valuation Looks High

This table highlights how AMZN is valued vs broader market. For more details see: AMZN Valuation Ratios

[2] Growth Is Strong

• Amazon.com has seen its top line grow at an average rate of 11.3% over the last 3 years
• Its revenues have grown 11% from $604 Bil to $670 Bil in the last 12 months
• Also, its quarterly revenues grew 13.3% to $168 Bil in the most recent quarter from $148 Bil a year ago.

This table highlights how AMZN is growing vs broader market. For more details see: AMZN Revenue Comparison

[3] Profitability Appears Moderate

• AMZN last 12 month operating income was $76 Bil representing operating margin of 11.4%
• With cash flow margin of 18.1%, it generated nearly $121 Bil in operating cash flow over this period
• For the same period, AMZN generated nearly $71 Bil in net income, suggesting net margin of about 10.5%

This table highlights how AMZN profitability vs broader market. For more details see: AMZN Operating Income Comparison

[4] Financial Stability Looks Very Strong

• AMZN Debt was $134 Bil at the end of the most recent quarter, while its current Market Cap is $2.4 Tril. This implies Debt-to-Equity Ratio of 5.7%
• AMZN Cash (including cash equivalents) makes up $93 Bil of $682 Bil in total Assets. This yields a Cash-to-Assets Ratio of 13.7%

[5] Downturn Resilience Is Moderate

AMZN saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• AMZN stock fell 56.1% from a high of $186.57 on 8 July 2021 to $81.82 on 28 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 11 April 2024
• Since then, the stock increased to a high of $254.00 on 3 November 2025 , and currently trades at $230.28

 
2020 Covid Pandemic

• AMZN stock fell 22.7% from a high of $108.51 on 19 February 2020 to $83.83 on 12 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 14 April 2020

 
2008 Global Financial Crisis

• AMZN stock fell 65.3% from a high of $5.04 on 23 October 2007 to $1.75 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 23 October 2009

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read AMZN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.