Amazon.com, Inc. (NASDAQ:AMZN) increased second-quarter 2026 advertising revenue 26% year over year to $19.8 billion, ahead of total sales growth of 20%. Seller-services revenue rose 16% to $46.8 billion. The investment question is whether merchants are buying better services or sacrificing profitability to remain visible.
Amazon.com, Inc. carries a forward P/E of 24x and a trailing P/E of 20x. Trailing P/E uses the past twelve months’ earnings; forward P/E uses forecast earnings. Investment gains boosted historical earnings and help explain the gap: quarterly results included $53.4 billion of pretax nonoperating other income, primarily from AI investments. Separating temporary gains from recurring profitability keeps the valuation focused on sustainable earnings.
Among e-commerce stocks, Amazon.com, Inc. combines seller fees with cloud profits. eBay Inc. (NASDAQ:EBAY) is a useful marketplace comparison but lacks equivalent cloud and fulfillment infrastructure. Analyst consensus projects calendar 2027 non-GAAP adjusted earnings per share growth of approximately 26% and 9%, respectively. The forward valuation looks reasonable if operating growth improves cash generation after investment.
Find AMZN among 10 Best Big Name Stocks to Buy According to Financial Media
A Marketplace Sellers Cannot Easily Replace
Amazon.com, Inc. combines customer traffic with its Fulfillment by Amazon (FBA) service, covering storage, picking, packing, delivery, and returns. Sellers can outsource these functions instead of financing an equivalent network. Faster delivery can improve conversion and inventory turnover, spreading merchant overhead across more orders.
The company delivered over 40% more items same-day or overnight in the first half. That strengthens convenience, although faster delivery must produce profitable orders.
Amazon.com, Inc. increased North American operating income to $9.1 billion from $7.5 billion. Calculated from segment disclosures, operating margin improved to 7.9% from 7.5%. Higher unit and advertising sales helped absorb rising operating costs. The segment includes first-party retail and subscriptions alongside marketplace activity.
Using rounded paid-unit growth and seller-mix disclosures, seller units grew approximately 15%, close to seller-services revenue growth. This suggests transaction volume remains an important revenue driver.
Tinuiti Inc.’s second-quarter advertiser benchmark showed Sponsored Products spending up 38%, clicks up 37%, and attributed sales up 44%. Sales outpacing expenditure suggests improved advertising efficiency among sampled advertisers.
For Amazon.com, Inc., sustaining that efficiency matters. Prime Day moved from July into June, boosting quarterly comparisons. Attributed sales can also include purchases that would have occurred without advertising. Merchant returns depend on incremental profit after product costs, fees, and returns.
When Monetization Becomes a Merchant Constraint
Amazon.com, Inc. raised average U.S. FBA fees by $0.08 per unit for 2026, then introduced a 3.5% fuel and logistics surcharge, averaging another $0.17 per U.S. FBA unit. The surcharge applies to fulfillment charges, not merchandise prices.
Higher logistics costs pressure the entire delivery chain. The ability to raise prices without driving customers away depends on service value. Sellers absorbing higher product, storage, and advertising costs may increase prices, reduce assortment, or invest in alternative channels. Those responses could weaken selection, conversion and future marketplace growth.
Advertising revenue also includes vendors and video advertisers. Seller-services revenue combines commissions with fulfillment and shipping. Neither revenue line directly establishes how much more individual merchants pay on each sale.
Amazon.com, Inc. reported negative $7.6 billion of company-defined non-GAAP free cash flow over the twelve months through June: $161.4 billion of operating cash flow less $169.0 billion of property and equipment purchases, net of sales proceeds and incentives. AI investment drove much of the increase. Quarterly cloud operating income reached $16.6 billion, but the valuation requires that profitability eventually translate into cash after capital spending.
Conclusion
Amazon.com, Inc. looks reasonably valued at 24x forward earnings if better merchant productivity supports recurring profit growth and investment delivers stronger cash returns. Improving retail margins support that view. Persistently weaker seller returns or cash generation would undermine it.
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This article is originally published at Insider Monkey.
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