The share price of Amazon (AMZN -1.87%) has nearly doubled over the past three years, but is only up about 12% year to date at the time of writing -- performing roughly in line with the S&P 500.
However, the company's year-to-date performance doesn't reflect its surging cash flow and growth in cloud services. This disconnect suggests now might be a good time to buy shares.
Image source: The Motley Fool.
Amazon's trailing-12-month cash from operations surged to $161 billion in the second quarter. That has been growing faster than the share price, pushing the stock's price-to-cash flow multiple down to about 17.
Amazon stock traded at a 25x cash flow multiple, or higher, before the 2022 bear market. It hasn't returned to those higher cash-flow multiples, despite cash from operations increasing by 245% over that period, driven by lower costs from warehouse automation as well as growth in its cloud computing business.
NASDAQ: AMZN
Key Data Points
Amazon Web Services (AWS) is the company's largest profit contributor, and its revenue is accelerating in 2026. AWS revenue climbed 37% year over year in the second quarter (excluding currency changes).
Further growth from AWS should translate into higher cash flow over time. Customers already run massive amounts of data and applications on AWS, making Amazon a key beneficiary as demand for AI cloud services grows.
With the core e-commerce business also accelerating, up 15% year over year in Q2, I believe now is a good time to buy Amazon stock. Investors are getting better value for the shares just as Amazon is seeing accelerating demand in its two largest businesses -- online retail and cloud computing.
