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Amazon Web Services Backlog Reaches $496 Billion: Does That Make Amazon Stock a No Brainer Buy?

Parkev Tatevosian, CFA•Aug 23, 2026

Summary

Parkev highlights that Amazon's AWS segment is seeing significant momentum, with revenue growing 37% year-over-year and a backlog reaching nearly $500 billion. Although Parkev acknowledges that Amazon has increased its capital expenditure forecast to $220 billion, which will result in negative free cash flow for 2026 and 2027, Parkev believes these investments in AI and AWS infrastructure are essential for future growth. Parkev emphasizes that Amazon's overall operating margins and returns on invested capital are at record highs, driven by increased network efficiency and the shift toward the more profitable cloud business.

Amazon (AMZN): Parkev recommends Amazon as a top stock to buy, calculating a fair value of $314 per share, which offers roughly 21% upside from the current market price of $259. Parkev notes that while the market is concerned about rising debt and short-term negative cash flow, the highly profitable AWS margins (over 35%) will eventually lead to massive free cash flow generation by 2029. Parkev points out that the company's operating profit margins have improved significantly to 12.68%, up from just 3% in 2017.

Mentioned Stocks

AMZN
Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev argues that Amazon is a buy because the accelerating growth in AWS and record-high operating margins demonstrate strong business efficiency. Parkev calculates a fair value of $314 per share, suggesting a 21% upside from the current price of $259. Parkev notes that while capital expenditures are rising to $220 billion, these investments in AI are focused on the high-margin AWS segment rather than lower-margin e-commerce.

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