Amazon.com Inc (NASDAQ:AMZN) may offer investors significant upside despite concerns over near-term capital expenditures and relative AWS growth, according to analysts at Jefferies.
The firm highlighted that Amazon shares have “been a frustrating laggard as sentiment faded on outsized AI capex and trailing AWS growth versus peers.”
Leading indicators, such as backlog growth and long-duration AI commitments, suggest a potential re-acceleration as new capacity comes online, Jefferies believes.
Jefferies emphasized that Amazon’s stock is trading at one of the lowest large-cap internet multiples, at 11x 2026 EV/EBITDA, compared with an average of 14x for peers.They believe that this valuation is “too cheap for what it is,” pointing out that Amazon has matched Walmart in retail gross merchandise volume while delivering higher growth and margins, yet trades roughly 10 turns below Walmart’s EV/EBITDA.
The analysts outlined several factors weighing on the stock. Amazon’s projected fiscal year 2026 capital expenditure of around $200 billion, a 56% increase year-over-year, reflects demand for AI infrastructure and is expected to temporarily create negative free cash flow. Jefferies described this as “a timing issue, not a structural or permanent one,” noting that as capacity ramps, free cash flow should recover.
AWS growth has also lagged behind competitors such as Microsoft Azure and Google Cloud Platform. Jefferies noted, however, that “AWS is poised to accelerate, supported by rising backlog conversion, multi-billion-dollar AI revenue run-rate, and a better enterprise demand mix.”
Despite skepticism around Amazon’s AI positioning, the analysts highlighted that the company’s “full-stack, model-agnostic platform is built for enterprise AI at scale, even if it lacks headline optics today.”
In retail, analysts wrote that concerns that AI-driven agentic commerce could bypass Amazon’s platform are mitigated by the company’s control of execution, fulfillment, and conversion-proximate intent.
Jefferies also highlighted longer-term growth drivers, including Amazon’s global AWS and advertising opportunities, ongoing investment in fulfillment and content, and its ability to expand into new products, services, and geographies.
The firm maintained a Buy rating on Amazon, with a base-case 12-month price target of $300, implying upside of 46% at the time of writing. An upside scenario could see shares reach $330, while a downside scenario puts the stock at $160.