By Christine Ji
The tech giant is now the cheapest stock in the ‘Magnificent Seven’ relative to historical levels – and some investors are doubling down
Among the “Magnificent Seven” names, Amazon’s stock trades at the biggest historic price-to-earnings discount.
For investors looking to add to their Big Tech holdings, shares of Amazon.com Inc. are on sale right now.
Amazon’s (AMZN) forward price-to-earnings ratio has been trending downward in recent months. As of Thursday, Amazon’s stock was trading at 29.6x earnings expectations for the next 12 months, marking a near-decade low for the tech giant.
Although the company’s current valuation levels are higher than the 10-year bottom of 25.3x that occurred in April of this year, the stock is trading materially lower than it has been in recent history. According to Dow Jones Market Data, Amazon’s average forward earnings multiple over the past year is 32.5x, a notable drop from the 2024 average of 36.5x.
To put that in perspective, the stock traded as high as 169.3x forward earnings in January 2018. Currently, Amazon is trading 42% below its five-year average forward multiple and 60% below its 10-year average – marking the biggest discount out of all the “Magnificent Seven” tech names.
Fueling this trend is the perception that Amazon’s high-growth days are over. Sentiment has soured this year due to concerns about the company’s AI strategy and whether Amazon Web Services can fully capture the boom in AI-driven demand. As a result, Amazon has become the worst-performing Magnificent Seven stock, closing Thursday down 1% this year to date, while the other stocks in the group are in the green.
Also read: Amazon’s stock is now Big Tech’s biggest loser in 2025 as the cloud race heats up
While some investors are quick to write off Amazon, the race to build out AI is still in its early stages, and the winners are far from certain. After all, just a few months ago, investors believed Alphabet Inc. (GOOGL) (GOOG) was at existential risk from ChatGPT; now, Alphabet is one of the best-performing Big Tech stocks in 2025, second only to Nvidia Corp. (NVDA)
For investors, Amazon’s low valuation today may represent an ideal entry point into a high-quality stock.
Jonathan Cofsky, a portfolio manager at Janus Henderson, believes Amazon is an incredibly solid business with plenty of potential to become an AI winner.
Amazon’s valuation is “pretty reasonable given their positioning,” Cofsky told MarketWatch. “AWS is a $123 billion run-rate business growing in the high teens. That’s an incredible scale of business with incredible profitability.”
While AWS has been growing at a slower pace than Microsoft Corp.’s (MSFT) Azure and Google Cloud, Amazon will be able to accelerate growth as its partnership with Anthropic ramps up in the coming quarters, Wells Fargo analyst Ken Gawrelski wrote in a note on Wednesday.
Janus Henderson’s Cofsky also pointed out Amazon’s expertise in retail and logistics: “It’s hard to imagine someone overcoming that,” he said. Cost-saving initiatives from automation and regionalization could further strengthen that part of Amazon’s business, according to Gawrelski.
Read: Why Amazon’s lagging stock now may offer the perfect buying opportunity
-Christine Ji
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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09-25-25 1637ET
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