Amazon Stock May Be Severely Undervalued after Middle East Disruption

Quick overview

Drone strikes in Bahrain and the United Arab Emirates disrupted power to Amazon Web Services on Monday, and the service was still struggling Tuesday as stock hit a 2026 low.

Amazon (AMZN) stock fell to $208 per share, the lowest price since June of last year, and some experts say it is undervalued. This typically high performing stock has been low since early February, remaining below $220 from then. Amazon is one of what are known as the Magnificent Seven stocks, which is a group of strong market movers that investors pay close attention to for their impact on the wider economy.

The stock has been struggling through the Iranian conflict as consumers watch their spending closely while they pay more for gas during the ongoing crisis. Oil has soared past $100 per barrel during much of the fighting. Amazon has taken a hit from the recent drone strikes as they are pulled into the conflict indirectly. The strikes have hurt the most lucrative aspect of their business.

Amazon’s 4th Quarter Performance

In early February, Amazon reported their 4th quarterly earnings and beat expectations. They reported sales for North America of $127 billion that were 10% higher than the year before. Their Amazon Web Services brought in $35.6 billion as well, which was an increase of 24% from the previous year.

The company’s net sales of $213 billion marked a 14% year-over-year increase and yet was not enough to keep their stock price elevated. The stock fell sharply following the earnings report as investors feared that Amazon may be spending too much on research and development costs. Their capex spending of $131 billion in 2025 shocked investors and shareholders and put a dent in their Q4 revenue celebrations.

At a time when tech companies are under strict scrutiny for their capital expenditures, Amazon drew the ire of tis shareholders who were concerned that they may not be as profitable as they were a few years ago when the focus was less on chasing the bleeding edge of artificial intelligence and more on website optimization.  

Is Amazon a Good Buy Right Now?

Even with Amazon stock low at the moment, it may be worth investing in them. In fact, this could be the perfect time. They are still a couple of months out from their next quarterly earnings report, so the stock has a chance to climb before shareholders worry too much about capex spending. The company has made no serious measures to reign in their capital expenditures, so we can expect that their stock will take another hit after their Q1 revenue report, even if the numbers beat Wall Street expectations again.

Outside of capex spending, though, Amazon is an excellent performing stock that the market pays attention to. Their disruptions on the AWS are temporary, and once they get those services back up and running smoothly, they should have a small stock boost. Amazon stock is rarely so cheap, particularly in relation to its cash flow.

Their e-commerce service is unparalleled, and there is no runner up that is even close to them on sales numbers and revenue in this market. They will likely continue to report billions of dollars in earnings each quarter as they fill a need that has only grown in the last decade. This may be the perfect time to jump on board and buy into this stock while the price is low. 

ABOUT THE AUTHOR See More

Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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