The Fortune 500 is an annual list compiled by Fortune magazine that ranks the 500 largest United States corporations by total revenue. Amazon currently holds the number one spot, recently displacing Walmart’s long streak. In the 72 years since the creation of the Fortune 500 list, only three companies before Amazon occupied the top spot. General Motors, ExxonMobil, and, most recently, the aforementioned Walmart.
Amazon continues to grow the topline at an impressive rate. FY 2026 revenues are estimated at more than $828 billion, more than 2.5% of US GDP, and 15.5% YoY growth. Despite the solid rate of growth, the company trades at a near-market multiple of just 22x FY 2027 adjusted EPS estimates of $12.35/share.
The ho-hum multiple may in part be a function of investor concern about the astonishing investments the hyperscalers are making. Amazon’s FY2027 CapEx is nearly $280 billion. If these enormous investments don’t bear fruit, that would indeed be a painful blow, but one should remember that Amazon’s FY2027 forecast EBITDA is also north of $280 billion. Translation? The company can afford the investment, and is as well positioned to monetize it as anyone.
Amazon, YTD
The only bad news is that technically the stock has been stuck in a rut since jumping 15% after reporting earnings on July 30th, and few catalysts between now and the next quarterly earnings report are anticipated.
The trade: Jade lizard
For investors who suspect Amazon could be range-bound for the next seven weeks, consider a “jade lizard”: a short strangle (short put and short call) combined with a higher-strike long call, which serves as a hedge.
The bet you’re making? That Amazon does not hit new all-time highs between now and late September, or alternatively is unlikely to fall through its pre-earnings levels.
In the worst-case scenario, one would either be compelled to purchase the stock at approximately the pre-earnings price, which we’ve already identified is quite reasonable, or alternatively take a modest risk if the stock should hit all-time highs, capped by the higher strike long $320 call.
Trade details:
- Sell 240 Sep 25 Put
- Sell 300 Sep 25 Call
- Buy 320 Sep 25 Call
