Overvalued Pick Of The Week

Stock Insight

Amazon is a dominant business by any measure—there’s no question about that. With a 2024 return on invested capital (ROIC) of 20.4% and a weighted average cost of capital (WACC) of 7.75%, it’s still creating value for shareholders. But that doesn’t mean the stock is a buy at any price. And today, at $223 per share, it’s priced like perfection is guaranteed.

Valuation models built on free cash flow (like Intrinziq's) don’t care about hype—they care about cash. Even assuming an aggressive 10.2% annual growth in FCF over the next decade, the fair value comes in at just $44.56 per share. That’s an 80% downside from today’s price.

This will be an unpopular opinion—especially among retail investors who see a tech giant trading “below its highs” and assume that makes it cheap. But in reality, Amazon is still trading at a 100x multiple on free cash flow (depending on which number you use), and its FCF has been anything but consistent. After losing nearly $32 billion across 2021 and 2022, it rebounded to $32B in 2023, only to fall again to $20.8B in 2024. That’s not a smooth trajectory—it’s a warning flag.

And that’s the core issue: to justify today’s price, you’d need to assume flawless execution, no major economic slowdown, and continued dominance across e-commerce, cloud (AWS), and AI infrastructure—all at once. For a $2 trillion company already stretched thin across multiple business units, that’s a very risky bet.

Amazon may be a great business, but even great businesses can become bad investments when you overpay.