Amazon (AMZN), the e-commerce and technology giant, shows a striking contrast between its impressive financial performance over the past five years and the movement of its stock price. Recent data show that despite meteoric growth in its key profit engines – cloud services (AWS) and advertising – the stock price has remained relatively subdued. This gap raises questions about the company’s current valuation and whether it presents an opportunity for both value and growth investors.

Dramatic Gap: The Numbers Tell a Story of Uncaptured Growth

Examining Amazon’s financial data over the five years ending in June 2025 reveals aggressive growth across all operational metrics:

Revenue: Up 108%.

Operating Cash Flow (OCF): Up 137%.

In contrast, Amazon’s stock price increased by only 25% during the same period. The discrepancy between over 100% growth in operational metrics and a mere 25% stock price increase highlights a significant divergence between internal performance and market pricing, signaling unrealized potential.

Profit Engines: AWS and Advertising as Growth Drivers

Amazon’s growth acceleration is currently driven by two high-margin sectors that outpaced the company’s general metrics:

AWS (Amazon Web Services): Amazon’s cloud revenues, forming the core of the company’s profit engine, surged 186% over the past five years. This cements AWS’s position as a global cloud leader and the company’s most significant profit driver.

Advertising Revenues: The advertising sector, growing rapidly with the expansion of Amazon’s retail platform, posted the fastest growth – a 215% increase. This highly profitable segment is expected to continue expanding as Amazon competes more directly with Google and Meta for digital advertising budgets.

Implications of the Gap: Is the Stock Relatively Undervalued?

The gap between Amazon’s operational performance and its stock returns suggests several possibilities. First, the market may have already priced in higher future growth, so any deviation from expectations led to a muted response. Second, volatility in the e-commerce sector and Amazon’s need to reinvest cash flow into infrastructure and future AI initiatives may have weighed on net income and short-term stock valuation.

Nonetheless, value investors may view the gap between 137% growth in cash flow and only a 25% increase in stock price as a clear sign that the stock is trading at a discount relative to its strong fundamentals, especially given its dominance in profitable markets such as cloud and advertising.