Amazon Inc. (NASDAQ:AMZN) has long been overlooked by investors despite being a $2.2 trillion e-commerce and cloud computing giant. Shares are down almost 13% over the past year, partly due to Wall Street’s lukewarm sentiment. Yet recent developments, including Federal Communications Commission (FCC) approval for 4,500 satellites, suggest that the company’s growth trajectory is far from slowing. This Amazon stock buy thesis is worth exploring.

FCC Approval Boosts Amazon’s Satellite Internet Ambitions

The FCC recently authorized Amazon to launch 4,500 low-earth orbit (LEO) satellites, with half required by Feb. 10, 2032, and the remainder by Feb. 10, 2035. With this approval, Amazon’s total count of authorized LEO satellites reaches 7,700. The project, known as Leo (formerly Project Kuiper), aims to deliver high-speed, low-latency internet globally, leveraging both Amazon’s satellite constellation and its AWS cloud infrastructure.

Leo is designed with enterprise networking and AWS integration in mind, making it attractive to businesses and governments. Amazon plans a tiered terminal lineup, including Nano, Pro, and Ultra, targeting consumer and industrial applications. Unlike pure-play satellite providers, Amazon benefits from deep relationships with launch suppliers, terrestrial fiber providers, and cloud infrastructure partners, providing it with a competitive commercial edge.

Challenges remain, particularly relative to SpaceX’s Starlink. Starlink already operates the largest active LEO broadband network with established hardware, software, and user terminals, giving it faster network effects and broader coverage today. Amazon must execute a complex program involving mass satellite production, multi-provider launches, and ground network deployment while meeting FCC milestones. Delays or higher-than-expected costs could impact competitive positioning.

Amazon Stock Buy Thesis: Revenue Accretion Through Leo

Leo has the potential to positively impact Amazon’s top line and margins over time. Revenue accretion is expected through three channels. First, recurring subscription fees from residential and enterprise customers will generate predictable revenue streams. Second, AWS integration will increase customer stickiness and cloud workloads routed through Amazon infrastructure. Third, economies of scale will lower per-satellite and per-terminal costs, expanding gross margins once the network reaches steady-state utilization.

Q4 Earnings Show Strength Despite Slight Miss

Amazon stock dipped after the company announced $200 billion in capital expenditures for 2026 to support AI growth. This surprised some investors, but the move underscores Amazon’s aggressive expansion and commitment to long-term growth.

Q4 2025 results highlighted net sales of $213.4 billion, up 14% year-over-year, while AWS revenue grew 24% to $35.6 billion. EPS increased 4.8% to $1.95, marking nine consecutive quarters of annual earnings growth, though slightly below the $1.97 analyst estimate. Net cash from operating activities rose 19.3% YoY to $54.5 billion, and the company ended the year with $86.8 billion in cash and no short-term debt.

For Q1 2026, Amazon expects revenues of $173.5 billion to $178.5 billion, indicating an approximate 13% annual growth rate at the midpoint. These results demonstrate continued strength in both e-commerce and cloud segments, reinforcing the Amazon stock buy thesis.

Valuation and Analyst Sentiment

Amazon stock trades at a forward P/E of 26.89, P/S of 2.76, and P/CF of 13.58. While these metrics are above the sector medians of 17.99, 0.97, and 11.67, respectively, they remain below Amazon’s five-year averages, suggesting the stock is reasonably priced relative to its historical valuation.

Analysts are overwhelmingly positive. Out of 57 covering AMZN stock, 49 rate it as a “Strong Buy,” five as a “Moderate Buy,” and three as a “Hold.” The mean price target is $285.94, indicating roughly 40% upside from current levels. Given Amazon’s strong fundamentals, growth trajectory, and satellite internet expansion, the company presents a compelling long-term investment case.

AWS and AI Drive Long-Term Growth

Beyond Leo, Amazon continues to benefit from AWS and AI adoption. AWS remains a core revenue engine, supporting cloud services, AI infrastructure, and enterprise workloads. The integration of AI into AWS offerings not only drives revenue but also strengthens the stickiness of Amazon’s ecosystem, making Amazon stock a buy for investors seeking exposure to both cloud and AI growth.

Moreover, Amazon’s diversified business model—combining e-commerce, logistics, digital services, and cloud infrastructure—reduces risk relative to single-segment companies. This diversified approach underpins the long-term Amazon stock buy thesis, as growth in one area can offset near-term pressures in another.

Risks to Consider

Despite the bullish case, investors should weigh potential risks. Execution challenges for Leo, ongoing regulatory hurdles, and competitive pressure from SpaceX’s Starlink and other global satellite internet providers may delay revenue contributions. Additionally, the heavy capital expenditure for AI and infrastructure expansion introduces short-term financial pressures, which may impact earnings volatility.

Conclusion

The FCC approval of 4,500 satellites, combined with robust AWS growth, consistent cash generation, and a diversified business model, makes a compelling case for the Amazon stock buy thesis. While the stock is trading near historical highs and faces execution risks, the long-term growth potential in cloud, AI, and satellite internet services supports upside for patient investors.

With analysts projecting a 40% potential increase in price and strong fundamentals across e-commerce and cloud businesses, Amazon remains well-positioned for growth. For investors with a medium- to long-term horizon, Amazon stock offers both resilience and opportunity in an evolving tech landscape.

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