Unanimous analyst support: is Wall Street overly optimistic on Amazon?

Similar scrutiny was previously applied to Microsoft (NASDAQ:MSFT).

Despite recent quarterly earnings slightly missing analyst expectations – GAAP EPS at $1.89 against a $1.96 estimate, and revenue of $201.94 billion compared to a $202.20 billion forecast – the strength of Amazon Web Services (AWS) remains a key driver of optimism. AWS revenue surged 39.3% to $46 billion, marking its sixth consecutive quarter of accelerating growth. The AWS backlog currently stands at $578 billion, and the company achieved a record consolidated operating margin of 13.9%.

Analysts continue to revise their estimates upwards. The projected EPS for fiscal year 2026 is now $10.5805, an increase from $10.4079 just ninety days prior. While the 2027 estimate has seen a slight downward adjustment from $12.9132 to $12.8122 over the same period, the overall trend remains positive.

However, Jim Cramer, during a November 3, 2026, episode of Mad Money, expressed caution regarding major tech companies, including Amazon. He stated, “For the last few years we’ve been conditioned to think that tech will be led by an Alphabet or an Amazon, Nvidia, a Meta, a Microsoft. But those have almost been millstones around investors.” He advised investors to “wait for the crescendo before I commit too much money back to tech.”

Amazon’s stock performance reflects this caution, having only gained 4.0% over the past year and trading approximately 10% below its 52-week high of $287.20. The company is also experiencing increased spending, with cash capex reaching $75.9 billion in the third quarter and projected to reach roughly $220 billion for the full year 2026, with further increases anticipated in 2027. This has resulted in a negative free cash flow yield of −0.44%.

While analyst ratings are overwhelmingly positive, 13F filings reveal a more divided picture. Of 30 filers as of June 30, 2026, 15 added shares, seven cut their positions, one initiated a new holding, and one sold. Notable investors include Coatue Management, holding a stake of $2.82 billion, with D.E. Shaw and Appaloosa adding shares, while Two Sigma, Point72, and Tiger Global reduced their holdings. These filings represent positions as of that specific quarter-end date.

Based on current fundamentals, the bullish outlook appears justified. AWS growth is accelerating, margins are at a record high, and earnings estimates are rising. The stock currently trades above its 50-day average of $253.79 and its 200-day average of $243.50, with a forward P/E ratio of 23. The stock also experienced a 6.1% increase in the week following the earnings announcement. While Cramer’s concerns about past performance and increased spending are valid, they may represent a rearview perspective.

The upcoming fourth-quarter report will be crucial in determining the validity of the current consensus. If AWS growth surpasses the 39.3% seen in the third quarter, it would solidify the zero-Sell rating. Conversely, a slowdown in AWS growth coupled with continued high capital expenditures could lend credence to Cramer’s “millstone” argument.