SpaceX (SPCX) went public in June, and Amazon (AMZN) suddenly has a listed rival in space. At first glance, the two companies do not look comparable in the niche. SpaceX’s Starlink grew 50% last year with revenue of $11.4 billion. SpaceX has 9,600 satellites in orbit against Amazon Leo’s 330 satellites. Stifel values Starlink alone at $1.25 trillion, slightly more than half of SpaceX’s enterprise value of $2.45 trillion.
But Amazon is not trying to win on satellite count. In April, the company agreed to acquire Globalstar (GSAT) for around $11.6 billion to expand its Leo satellite network. It recently introduced Leo Ultra, which is the fastest satellite-internet antenna in history according to management. Another key development is the company’s recent agreement with Apple (AAPL); Amazon Leo will now power satellite features on the iPhone and Apple Watch. Earlier this year, Amazon also signed Delta (DAL) and JetBlue (JBLU) to put Leo internet on hundreds of planes from 2028 onwards.
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This is the part investors may be missing. Despite promising updates on Amazon Leo, the market continues to price it at close to nothing. Stifel valued Starlink at well over $1 trillion, while Leo barely makes a difference in how AMZN stock is valued — even after Apple, Delta, and JetBlue have signed up. The company’s satellite business is nowhere near Starlink right now, but the market might still be undervaluing it by barely counting the business at all.
About Amazon Stock
Amazon is a global technology company that operates across e-commerce, digital advertising, digital entertainment, and cloud computing. Its product portfolio includes its online marketplace, Amazon Web Services (AWS), Prime Video, Kindle, Echo, Fire TV, and custom-designed silicon. Founded in 1994 by Jeff Bezos, the company is headquartered in Seattle, Washington, and led by CEO Andy Jassy.
Over the last 12 months, AMZN stock has climbed 13%, underperforming the S&P 500’s ($SPX) 21% gain during the same period. The underperformance has primarily been due to the company planning to spend around $200 billion in capital expenditures in 2026, directed mostly toward AI infrastructure.
www.barchart.comAmazon’s valuation looks reasonable when viewed against its own history. The company does not have a meaningful forward GAAP price-to-earnings (P/E) ratio due to periods of low profitability in recent years. This makes the forward price-to-sales (P/S) ratio a more reliable measure.
The forward P/S ratio of 3.7 times sits at a modest premium to the company’s own five-year average. The EPS growth trajectory considerably justifies this premium, with consistent double-digit growth expected through at least 2029. Amazon’s heavy AI investment has weighed on its free cash flow in the near term. However, strong operating cash flow ensures the underlying business remains highly profitable. Net debt of $92 billion also appears very manageable for a company with a $2.66 trillion market capitalization. Overall, for a company continuing to grow in cloud, advertising, and AI, Amazon's valuation looks justified.
Amazon Reports Q1, AWS Hits Fastest Growth in 15 Quarters
Amazon reported first-quarter fiscal 2026 earnings on April 29. The firm delivered a strong quarter, beating the revenue consensus estimate.
Revenue of $181.5 billion increased 17% year-over-year (YOY), coming in above the $177.3 billion consensus. CEO Andy Jassy also noted that AWS accelerating 28% YOY marked its fastest growth in the last 15 quarters. Amazon also hit a significant milestone with delivery speed, completing more than 1 billion overnight or same-day deliveries in 2026. “We’re well positioned to lead, and I’m very optimistic about what’s ahead for our customers and Amazon,” said Jassy in the report.
For Q2, guided revenue of $194 billion to $199 billion represents 16% to 19% YOY growth. This promising guidance was helped by the company's decision to move Prime Day into the second quarter of the year.
The concern for investors remains Amazon’s plans to invest $200 billion in capex in 2026. Amazon's heavy spending reduced 12-month trailing free cash flow from $25.9 billion to just $1.2 billion as of Q1. The company's AI-driven capex plan was the main reason for AMZN stock falling after the report, despite a strong financial quarter.
What Are Analysts Saying About Amazon Stock?
Monness analyst Brian White recently increased his price target on AMZN stock from $241.70 to $315 while reiterating a “Buy” rating. The positive outlook follows a record Prime Day event and continued AWS business momentum. Wells Fargo analyst Ken Gawrelski and Bank of America Securities analyst Justin Post also recently maintained positive ratings for the stock.
Based on 56 Wall Street analysts with coverage, Amazon holds a consensus “Strong Buy” rating with a mean price target of $315.40, indicating 24% potential upside from current levels. Of those 56 analysts, none suggest selling AMZN stock. This is understandable for a company whose shares have only seen modest gains despite strong financial results.
www.barchart.com On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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