Does Amazon’s Push in India Signal More Upside for the Stock in 2025?

If you are holding Amazon stock right now, or considering whether to jump in, you are definitely not alone. Nearly everyone seems to have an opinion about what comes next for one of the world’s most important companies. In the past year alone, Amazon shares have climbed by 30.4%, and the three-year return stands at an impressive 76.3%. That kind of performance places Amazon among the top long-term performers, even as questions about its next steps continue to circulate.

What is driving these moves? While the whole market rides waves of sentiment, Amazon has recently attracted attention for its active expansion. The company is lobbying the Indian government for more direct access to sellers, making new bets on groceries, and reportedly planning to overhaul its Fire tablets with Android. Amazon is pursuing growth opportunities and leveraging its scale to succeed under challenging trade conditions. Investors appear to be rewarding that adaptability, as Amazon continues to find ways to stay relevant and competitive.

But what about its price? With Amazon’s value score at 3 out of a possible 6―meaning it passes half of key undervaluation checks―there is reason for both optimism and a bit of caution. This makes now a good time to take a closer look at Amazon’s valuation. Next, we will break down how different methods approach the question: is Amazon a bargain, or is the stock simply reflecting its true potential? And stay tuned, because by the end of this article, you’ll see a smarter way to think about value.

Amazon.com delivered 30.4% returns over the last year. See how this stacks up to the rest of the Multiline Retail industry.

Approach 1: Amazon.com Cash Flows

The Discounted Cash Flow (DCF) model estimates what a company is worth by projecting future cash flows and then discounting those sums back to today’s value. In Amazon’s case, this offers a data-driven glimpse into its real underlying worth, beyond market sentiment.

Amazon’s most recent annual Free Cash Flow (FCF) sits at $37.6 billion, an impressive base for such a massive retailer. Looking ahead, analysts expect strong growth, projecting FCF to climb to $138.5 billion by 2029. For the next five years, these forecasts are analyst-driven, and figures beyond that involve further estimates. This adds some uncertainty but provides a useful directional sense.

Running these numbers through a two-stage DCF framework yields an intrinsic value of $276.52 per share. Based on current market pricing, this suggests Amazon stock is 17.2% undervalued, meaning the shares are priced below what the company’s future cash generation justifies.

For investors weighing the stock, this DCF-based model indicates that Amazon is trading at a meaningful discount to its intrinsic value, particularly considering its scale and growth prospects.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Amazon.com.

Our DCF analysis suggests Amazon.com is undervalued by 17.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Amazon.com Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular way to value profitable companies like Amazon, as it captures how much investors are willing to pay for each dollar of earnings. For businesses with consistent profits, the PE ratio reflects both current performance and the market’s view of future earnings potential.

What counts as a “normal” or “fair” PE varies based on factors such as growth prospects and company-specific risks. High-growth or lower-risk firms typically trade at higher PE multiples, while slower-growing or riskier businesses tend to have lower valuations.

Amazon’s current PE ratio stands at 34.6x, which is above the Multiline Retail industry average of 22.7x, but below the average of its close peers at 58.0x. This highlights Amazon’s premium position as a dominant, rapidly growing player. At the same time, it shows that Amazon is valued more conservatively than some other major companies in its peer group.

To provide a more precise view, Simply Wall St calculates a tailored “Fair Ratio” of 43.7x for Amazon. This Fair Ratio incorporates not only industry trends and peer comparisons, but also Amazon’s unique earnings growth, scale, profit margins, and risk profile. It offers a more nuanced benchmark for Amazon’s valuation, rather than relying solely on potentially skewed industry or peer group figures.

Because Amazon’s current PE of 34.6x is noticeably below the Fair Ratio of 43.7x, the stock appears undervalued by this measure. This suggests the market may not be fully pricing in Amazon’s earnings power and growth potential.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Amazon.com Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. Narratives put you in control, letting you create an investment story based on your perspective on Amazon’s future. This links your assumptions and outlook, such as where revenue, earnings, and profit margins are headed, to a concrete financial forecast and a fair value for the stock.

This dynamic approach goes beyond just the numbers, helping you clarify not only what Amazon is worth but also why. Narratives are an accessible, easy-to-use tool built right into Simply Wall St’s Community page, already used by millions of investors. They let you compare your fair value estimate to today’s share price and make better-informed decisions about buying, holding, or selling, while also seeing how your outlook stacks up against others.

Whenever news or earnings updates arrive, your Narrative updates automatically, keeping your analysis current. For example, if you think Amazon can achieve robust revenue growth and margin expansion, your Narrative might suggest a valuation as high as $434 per share. In contrast, a more conservative view might yield a fair value closer to $151. This shows just how much perspectives and outcomes can differ.

For Amazon.com, however, we'll make it really easy for you with previews of two leading Amazon.com Narratives:

🐂 Amazon.com Bull Case

Fair Value: $234.75

Currently 2.5% undervalued

Revenue Growth Rate: 13.6%

• Bullish on long-term growth potential, highlighting Amazon's leadership in e-commerce, cloud services (AWS), and advertising innovation. There is some near-term pressure on AWS revenue growth.
• Highlights significant capital investments in AI, data centers, and expansion projects, with projections for continued revenue and earnings growth over the next decade.
• Sees the current share price as offering an attractive entry point and acknowledges competition and vague AI guidance as minor risks.

🐻 Amazon.com Bear Case

Fair Value: $222.55

Currently 2.8% overvalued

Revenue Growth Rate: 15.19%

• Emphasizes that while Amazon's profitability and growth drivers are robust (3P sellers, AWS, Advertising), current and planned heavy reinvestment is expected to suppress free cash flow in the near term.
• Notes that growth in online stores, third-party sellers, and AWS should continue. However, short-term economic headwinds or regulatory risks could temper these expectations.
• Believes the stock may already reflect much of this growth, suggesting limited near-term upside given ongoing investment and macro risks.

Do you think there's more to the story for Amazon.com? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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