Should You Buy Amazon Stock, Even Though It Has Badly Underperformed the S&P 500 and Nasdaq-100 Since Jeff Bezos Stepped Down as CEO?
2026-07-20 13:12
•Dave Kovaleski •The Motley Fool
••••••• •••••• Axe Capital view
Amazon’s Struggle and South Africa’s Tech Exposure
Amazon’s recent underperformance clouds its comeback despite a strong AWS recovery and AI bets.
Since Jeff Bezos stepped down, Amazon’s shares have noticeably lagged behind the S&P 500 and Nasdaq-100, returning just 6.8% a year. While AWS still leads cloud infrastructure, Microsoft and Google have chipped away at its market share, making it less dominant than before. That said, AWS posted a rare 28% growth last quarter, the highest in over three years, and Amazon’s new AI chip venture shows serious promise with a potential $50 billion valuation. The stock trades at a reasonable 29 times forward earnings, tempting investors looking beyond hype. Locally, Naspers and Prosus investors should watch this space closely, given their significant US tech exposure and correlation with global cloud trends. However, Amazon’s turnaround is not guaranteed; intensified competition and execution risks remain significant. If the cloud war shifts further away from Amazon, the knock-on effect could pressure South African tech counters and keep the USD/ZAR elevated. this is just my opinion and not financial advice
I would watch Amazon for signs that its AWS growth and AI ambitions sustain. South African investors should remain cautious on Naspers and Prosus until Amazon’s turnaround gains clarity, favoring a neutral stance for now.
- AMZN
- Naspers
- Prosus
- USD/ZAR
- Amazon loses more cloud market share to Microsoft and Google
- Execution failure on AI chip strategy hurting earnings growth
6/10
Amazon has significantly underperformed the S&P 500 and Nasdaq-100 over the past five years since Andy Jassy took over as CEO, posting only 6.8% annualized returns. The company has lost cloud market share to Microsoft and Alphabet despite AWS remaining the largest provider, and e-commerce growth has slowed. However, recent improvements in AWS growth (28% last quarter), a $364 billion contracted backlog, and a promising AI chip business valued at potentially $50 billion suggest Amazon could turn around, with the stock now trading at a reasonable 29x forward earnings valuation.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Dave Kovaleski
Categories: Equities, Earnings, Technology, AI, Semiconductors, Consumer, Retail
Tickers: AMZN, MSFT, GOOG, GOOGL, GOOGM, GOOGN
Sentiment: Positive - Despite five years of underperformance, the article presents a bullish case citing improved AWS growth rates (28% last quarter, best in 15 quarters), substantial $364 billion contracted backlog, promising $50 billion AI chip business with $225 billion in revenue commitments, and attractive 29x forward earnings valuation suggesting recovery potential. Microsoft is highlighted as gaining cloud market share from Amazon, increasing from unspecified baseline to current levels, and is one of the few Magnificent Seven stocks that came close to Amazon's underperformance, indicating relative strength in the AI and cloud computing space.
Keywords: Amazon underperformance, AWS market share loss, AI infrastructure investment, Trainium chips, cloud computing, e-commerce growth slowdown, valuation opportunity
Insights:
- AMZN: Positive: Despite five years of underperformance, the article presents a bullish case citing improved AWS growth rates (28% last quarter, best in 15 quarters), substantial $364 billion contracted backlog, promising $50 billion AI chip business with $225 billion in revenue commitments, and attractive 29x forward earnings valuation suggesting recovery potential.
- MSFT: Positive: Microsoft is highlighted as gaining cloud market share from Amazon, increasing from unspecified baseline to current levels, and is one of the few Magnificent Seven stocks that came close to Amazon's underperformance, indicating relative strength in the AI and cloud computing space.
- GOOG: Positive: Alphabet's Google has gained cloud market share at Amazon's expense and is performing well among Magnificent Seven stocks with double-digit annualized returns, demonstrating competitive strength in cloud infrastructure and AI.