Amazon has had an impressive run over the past six months as its shares have beaten the S&P 500 by 12.8%. The stock now trades at $260.22, marking a 24.9% gain. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now still a good time to buy AMZN? Or is this a case of a company fueled by heightened investor enthusiasm? 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 proves that huge, scaled companies can still grow quickly. The company’s revenue base of $443.3 billion five years ago has increased to $775.7 billion in the last year, translating into an impressive 11.8% annualized growth rate.
Over the same period, Amazon’s big tech peers Alphabet, Microsoft, and Apple put up annualized growth rates of 15.1%, 14.6%, and 6.1%, respectively. 
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 34.1% compounded annual growth rate over the last five years, higher than its 11.8% 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
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Amazon has shown poor cash profitability relative to peers over the last five years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 1.6%, below what we’d expect for a consumer internet business.
Final Judgment
Amazon’s merits more than compensate for its flaws, and with its shares topping the market in recent months, the stock trades at 28.8× forward price-to-earnings (or $260.22 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
