Amazon Stock Undervalued Amid Layoffs and AI Investment

3 months ago

Parkev Tatevosian, CFA

"Now does this mean investors should dump Amazon stock? Does this make Amazon stock more attractive? Uh I think more so that it makes Amazon stock more attractive because it is evidence that the company is benefiting from those investments in artificial intelligence and it can do more with the same amount of people or it can do the it can do the same amount with fewer people. And so the intrinsic value per share I calculated and updated today for Amazon is $295. The stock price is $227. So, I still see this stock as being meaningfully undervalued. I bought Amazon stock for my own portfolio a few weeks ago. And then on top of this news, we got more news over the weekend about thawing trade war negotiations between the United States and China, which of course means a whole lot for Amazon because a large percentage of the products on the Amazon platform that are sold in the United States are sourced from China. So the increase in trade barriers, the increase in tariffs will likely make a lot of those items more expensive and will likely cause a lot of disruption on the platform. None of which will be good for Amazon. It'll be negative, but it'll just depend how negative it will be. And of course, if the relations are improving, the tariff percent might not be as large and the impact might not be as negative. So all in all, I still like Amazon stock. I still think it's undervalued. These developments are mixed. It's not all positive, but overall positive. And I like Amazon a lot more today than I did over the weekend."

The speaker argues that Amazon stock is materially undervalued based on an updated intrinsic value of $295 compared to its current price of $227, citing cost efficiencies from mass layoffs and significant investment in AI initiatives. Despite mixed signals from macro factors such as rising tariffs due to trade tensions, the overall conviction remains bullish, prompting a personal portfolio buy.

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