After briefly passing a $1 trillion market capitalization in September, (AMZN 0.58%) has seen its value fall sharply and quickly. As of market close on Tuesday, the e-commerce and cloud-computing company had a market capitalization of $773 billion. In other words, over $200 billion has vanished from Amazon's market cap.

As of Nov. 27, Amazon shares are down 21% since Oct. 1. The decline is due to a combination of a broader market sell-off that hit high-growth tech stocks particularly hard, as well as the company's weaker-than-expected guidance for its fourth quarter. Is this sell-off justified? Or is this a buying opportunity?

A close look at Amazon's business shows why the stock's recent decline may be an overreaction. Here are four reasons I'm bullish on Amazon stock today.

Boxes in an Amazon fulfillment center

Image source:

1. Operating income is surging

Sure, Amazon's revenue growth may be decelerating recently. The company's third-quarter net sales were up 29% year over year -- significantly lower than the 39% net sales growth Amazon saw in its second quarter. But the company is delivering surreal growth when it comes to profitability. In Amazon's most recent quarter, for instance, operating income surged from $347 million in the year-ago quarter to $3.7 billion. Furthermore, for the nine-month period ending Sept. 30, operating income was $8.6 billion -- up from $1.9 billion in the same period last year.

This strong growth in Amazon's operating income is fueled by improving economies of scale in the company's North American e-commerce operations and outsize growth in Amazon Web Services (AWS), which boasts a significantly higher operating margin than the rest of Amazon's business.

2. Amazon Web Services is underestimated

Much of the focus on Amazon's business in the media concerns the company's e-commerce business. Case in point: The main reason Amazon's stock fell when it reported its third-quarter results in October was its revenue guidance for Q4 -- and Amazon's revenue guidance is primarily influenced by its e-commerce business since AWS accounts for only 10% of Amazon's total revenue.

Though AWS has little influence over Amazon's consolidated top-line trajectory, the cloud-computing business is Amazon's bread and butter. For the trailing-nine-month period ending Sept. 30, for instance, AWS operating income of $5.1 billion represented 73% of Amazon's consolidated operating income.

And how's AWS doing? It's crushing it. In Q3, AWS revenue was up 46% year over year -- and AWS operating income was up 72%.

3. Amazon's growth story is intact

While the surging growth in AWS alone makes a strong case for Amazon's growth story, it's also worth addressing the company's fourth-quarter revenue guidance, since it played a key role in the stock's recent decline.

While Amazon's revenue growth is undoubtedly decelerating, there are a few notable factors weighing on the company's fourth-quarter revenue guidance for 10% to 20% year-over-year revenue growth. First, management anticipates an 80-basis-point headwind in foreign exchange rates. Second, this marks the first full period in which Amazon is up against a full quarter of Whole Foods sales, as the acquisition was made in August of last year. Finally, management noted in the company's third-quarter earnings call that the period is simply difficult to forecast since much of the period's revenue "comes in that very tight window between [the] middle of November and the end of the year." This situation is likely to lead management to be conservative in its outlook.

Despite having a limited window into how the quarter may pan out, Amazon CFO Brian Olsavsky sounded confident about the period in the company's third-quarter conference call:

What I would say is that we feel like we're in great shape for the holiday. The warehouses are very clean. We feel like we're going to have great capacity, not only for retail products, but also for [Fulfillment By Amazon]. We're going to have great capacity for shipping to our customers. So, we're very ready to go.

4. Amazon's valuation is better than it looks

Last, but not least, is Amazon's valuation. Though the stock's price-to-earnings ratio of 89 may seem excessive at first glance, it's not. Far from it. Considering how fast Amazon's earnings per share has been growing, the company's premium price-to-earnings ratio makes perfect sense. Amazon's trailing-nine-month earnings per share, for instance, is $14.10, up from $2.39 in the same period last year.

Unsurprisingly, analysts expect further gains in economies of scale and continued rapid growth in AWS to drive more strong earnings-per-share growth in the coming years. Analysts, on average, expect earnings per share to rise 35% next year and to compound at a rate of 44% annually over the next five years. Of course, analysts' forecasts could prove to be far from reality. But the point is that Amazon's business looks poised to deliver more uncanny bottom-line growth, helping the company grow into its valuation and possibly even make today's stock price look like a steal in retrospect.

Yes, there are risks. If AWS's growth decelerates rapidly, or if Amazon's e-commerce business is closer to peaking than investors expect, the stock could fall further. But for investors willing to hold for the long haul, this looks like a good entry point.