Amazon.com's stock has trailed the market over the past year, yet its margins sit at multi-year highs, and it is the margin that has room to fall. Trading at $256.26, about 90% of its 52-week high, the stock returned 12% over the past twelve months versus 20.5% for the S&P 500. The headline trailing price-to-earnings ratio of 20.4 is artificially depressed by roughly $41 billion in non-operating gains, while the net margin of 17.4% on $775.7 billion of revenue is the highest in at least five years and nearly double its three-year average of 9.4%. The operating lift is concentrated in AWS, which produced $16.6 billion of the $27.5 billion in Q2 2026 operating income, but a non-operating valuation gain on Anthropic added over $53 billion below the operating line, and about $600 million in tariff refunds also reduced expenses. Management expects those refunds to be the significant majority of what it receives, while the fulfillment network absorbs fuel inflation and higher line-haul rates, partly offset by an FBA fuel and logistics surcharge. Amazon has raised planned 2026 cash capital expenditure to approximately $220 billion from about $200 billion, and operating cash flow covered about 119% of net income over the last twelve months, down from about 172% a year earlier. Implied volatility of 29% sits in the 21st percentile of its trailing one-year range, suggesting the market is not braced for a large move. Operating income for Q3 2026 is guided to between $22.5 billion and $26.5 billion, and the figure to watch is whether it lands inside that range without another one-off item doing the work.
Amazon.com IncRising costs and capex pressure margins despite one-off gains
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