Should You Buy Amazon Stock Before Oct. 29?

Corporate America just entered earnings season for the quarter ended Sept. 30. It comes at a critical moment, because investors are grappling with elevated inflation, rising interest rates, and turbulence in the artificial intelligence (AI) industry -- all while the S&P 500 index is trading at a historically expensive valuation. So, strong corporate earnings will be necessary to keep this bull market going.

Amazon (NASDAQ: AMZN) is one of the companies at the center of the AI boom. It operates an industry-leading cloud platform, develops its own large language models (LLMs), and even designs its own data center chips. It's scheduled to release its operating results for the third quarter on Oct. 29, and they will give investors some insight into the current state of the AI industry.

Amazon stock looks attractively valued right now, so is it a buy heading into the report?

Image source: The Motley Fool.

All eyes on Amazon Web Services

Amazon Web Services (AWS) is Amazon's cloud computing platform, which offers a growing portfolio of tools and services that enterprises need to develop and deploy AI software. It's consistently the company's fastest growing business segment, and it's also the most profitable, so its results will be Wall Street's main focus on Oct. 29.

AWS operates state-of-the-art data centers all over the world which house advanced AI chips from suppliers like Nvidia, and it rents the computing capacity to its enterprise customers. However, Amazon also designs its own chips now, like Trainium2 and Trainium3, which it says offer better price-performance than the competition.

Amazon not only rents these chips, but also sells them to customers, and sales revenue was tracking at an annualized rate of over $25 billion on June 30. This could become a huge business over the long term, so look out for some updated numbers on Oct. 29.

In addition to computing capacity, enterprises also need ready-made LLMs to sit at the foundation of their AI software projects, and the AWS Bedrock platform offers a library of 100 of them. AWS also built an AI-powered coding assistant called Kiro that can help programmers bring software to life more quickly.

AWS generated $42.2 billion in total revenue during the second quarter of 2026, up 37% from the year-ago period. That growth rate accelerated for the fourth-straight period, so the platform was carrying significant momentum into the third quarter.

As of June 30, AWS had a whopping $496 billion order backlog from customers who were waiting for more data center capacity to come online. That number increased by a triple-digit percentage year over year, which is a sign revenue growth could accelerate even further in the coming quarters.

Longer term, Amazon chief executive Andy Jassy thinks AWS can eventually reach $1 trillion in annual revenue, so while the Oct. 29 report will be important, it's just one part of a much bigger growth story.

Amazon stock looks attractively valued heading into Oct. 29

Amazon's earnings have steadily improved over the last few years, not just because of AWS, but also because its flagship e-commerce business is gradually becoming more profitable. The company generated earnings of $12.44 per share over the last four quarters, placing its stock at a price-to-earnings (P/E) ratio of just 21.2, so it's much cheaper than the tech-heavy Nasdaq-100 index which has a P/E of 30.2.

But there is one caveat. In the first half of 2026, over $69 billion of Amazon's $120.7 billion in pre-tax profit came from paper gains from its investment in Anthropic, which were completely unrelated to the company's operations. That's why Wall Street's average forecast (provided by Yahoo! Finance) suggests Amazon's earnings will actually decline to $10.55 per share in 2027. But with a forward P/E of 25 based on that estimate, its stock is still very attractively valued.

The signs suggest Amazon's third-quarter report will be another blockbuster, thanks primarily to AWS. Therefore, its stock could be a solid buy ahead of Oct. 29, but it's important for investors to stay focused on the long term, because the best returns won't come over the next few months, but rather over the next 5-to-10 years.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.