Amazon’s valuation dips to a 15-year low despite strong Q1 2025 sales growth and heavy AI-driven capex spending.
Amazon’s price-to-earnings (P/E) ratio fell to 29, its lowest since the 2008 financial crisis, despite a 17% year-over-year net sales increase in Q1 2025. Investor concerns over aggressive capital expenditures (capex) drove the decline, with the company pledging $200 billion in spending for 2026 alone—outpacing Alphabet’s $175 billion to $185 billion and Meta’s $125 billion to $145 billion.
Free cash flow plummeted to $1.2 billion over the trailing 12 months, prompting Amazon to issue $25 billion in bonds this month to fund capex. The company’s $143 billion in liquidity had previously made such debt raises unlikely. AI investments appear to be paying off, with e-commerce and cloud segments showing improved performance.
The stock’s valuation drop raises questions about whether the sell-off is overdone or reflects long-term concerns about Amazon’s ability to sustain high multiples in competitive markets.