2 Reasons to Watch AMZN and 1 to Stay Cautious

September 02, 2025 at 00:01 AM EDT

AMZN Cover Image

Amazon trades at $228.79 and has moved in lockstep with the market. Its shares have returned 11.6% over the last six months while the S&P 500 has gained 10.5%.

Is now a good time to buy AMZN? Find out in our full research report, it’s free.

Why Does Amazon Spark Debate?

Founded by Jeff Bezos after quitting his stock-picking job at D.E. Shaw, Amazon (NASDAQ: AMZN) is the world’s largest online retailer and provider of cloud computing services.

Two Positive Attributes:

1. Skyrocketing Revenue Shows Strong Momentum

Amazon shows that fast growth and massive scale can coexist despite conventional wisdom. The company’s revenue base of $321.8 billion five years ago has doubled to $670 billion in the last year, translating into an incredible 15.8% annualized growth rate.

Over the same period, Amazon’s big tech peers Alphabet, Microsoft, and Apple put up annualized growth rates of 17.5%, 14.5%, and 8.3%, respectively. Quarterly Revenue of Big Tech Companies

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it shows whether a company’s growth is profitable. It also explains how taxes and interest expenses affect the bottom line.

Amazon’s EPS grew at an astounding 38.2% compounded annual growth rate over the last five years, higher than its 15.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

One Reason to be Careful:

Mediocre Free Cash Flow Margin Limits Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills or invest for the future.

Amazon has shown poor cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.5%, lousy for a consumer internet business.

Amazon Trailing 12-Month Free Cash Flow Margin

Final Judgment

Amazon’s positive characteristics outweigh the negatives, but at $228.79 per share (or 34.3× forward price-to-earnings), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.

High-Quality Stocks for All Market Conditions

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