Amazon's $200 billion AI spending plans have weighed on the stock, overshadowing robust cloud and retail growth, Jefferies argues.

Amazon has been left in the dust of the artificial-intelligence trade, and its valuation has sunk to a level not seen for 18 years. For some on Wall Street, that's the signal to buy in.

Shares of Amazon are "mispriced, not broken," Jefferies analyst Brent Thill wrote in a Sunday note. Concerns over elevated AI spending and arguably lackluster cloud growth have helped drag the stock 11% lower over the course of 2026. The pessimism has reached extreme levels, according to Thill, who sees the negativity at odds with "leading indicators" such as increasing data-center capacity and strength in the retail business.

He has a buy rating and a $300 price target on the stock, implying the potential for 46% upside from current levels.

In February, Amazon's forward valuation as a multiple of Ebitda - or earnings before interest, taxes, depreciation and amortization - reached a trough of 10.36. That's the lowest level since November of 2008, when the multiple was 10.07, according to Dow Jones Market Data. Amazon has hovered in the same range since February, trading at 10.39 times forward Ebitda today.

While Amazon's stock has been a "frustrating laggard" for the last year, its underperformance extends over many years, Thill wrote. Amazon's stock has lagged the averages for competitors in both the cloud and retail sectors over a five-year horizon, returning 34% while cloud peers returned 121% and retail peers returned 64%, according to Jefferies.

Amazon's valuation has become so depressed that the company is now cheaper than Wal-Mart, which is valued at around 21 times Ebitda. Amazon has historically traded at a premium to Walmart even during the 2008 financial crisis, Thill wrote. Investors are so focused on the near-term AI challenges for Amazon that the stock is being treated like that of a "mature retailer," with "limited value" being ascribed to the AWS cloud-computing business, Thill wrote.

Amazon's plan for $200 billion in capital expenditures this year has spooked some investors, but Thill said he believes those concerns are "overblown," arguing that the spending is tightly linked to visible customer demand. Amazon recently expanded its partnership with OpenAI by $100 billion over eight years, with OpenAI pledging to consume approximately 2 gigawatts of compute on Amazon's in-house Trainium chips. "We think this uniquely positions Amazon as one of the few platforms capable of supporting AI at this scale," Thill wrote.

AWS revenue has accelerated for the past three quarters, and the business should be able to sustain over 20% growth for multiple years, Thill wrote. The growth is impressive considering that AWS is 40% larger than Microsoft's Azure and 200% larger than Alphabet's Google Cloud.

Amazon's retail business is also trading at an unjustified discount to peers, Thill added. Amazon has effectively matched Walmart in retail gross-merchandise volume while delivering higher growth rates and superior margins. In 2025, Amazon's retail business grew 10.9% with a 5.8% margin, compared with Walmart's 4.7% growth and 4.4% margin, Thill pointed out.

As seen with Alphabet's rise from AI loser to winner over the last year, the Big Tech rankings are subject to rapid change in today's landscape. "We've seen this movie before," Thill said. "We see a similar sentiment and value inflection setting up" for Amazon.