Andy Jassy Just Delivered Magnificent News for Amazon Investors

AWS just posted its strongest quarter on record, and AMZN's valuation looks stretched to the downside. The cloud unit reported Q3 revenue of $45.9 billion, up 39% year over year, extending a streak of six consecutive quarters of accelerating growth.

CEO Andy Jassy went further on the outlook. He forecast AWS could grow revenue by more than 40% in 2027-2028 and become a trillion-dollar revenue business within five to 10 years, pointing to expanding AI services and custom chip adoption as the drivers.

The stock hasn't reflected the momentum. AMZN has corrected 15%, and it now trades at a P/E of 19.4 versus 29.9 for the Nasdaq-100. Interpretation: that roughly 10-point multiple gap suggests the market is pricing AMZN well below the index despite accelerating growth at its cloud unit.

The 40%-plus target also implies growth would need to keep stepping up from the current 39% pace. That is management's forecast, not a result, so the thesis depends on execution.