Amazon’s Stock Volatility: Is Now the Time to Invest?

NEW YORK, March 4, 2025 — Amazon.com Inc.’s stock dipped over 3% on March 3, following a broader decline in Wall Street indices triggered by President Trump‘s tariff announcements. The Dow Jones plummeted by 1.8%, while the S&P 500 fell 2.1%, marking the market’s most significant decline of the year. At $205 per share, AMZN appears enticing yet volatile, raising questions for investors regarding its suitability as a buy.

Despite its current valuation, which some analysis suggest is high, experts argue that the underlying fundamentals of Amazon’s operating performance remain robust. Recent comparisons of Amazon’s performance against key financial metrics reveal a strong overall position. Analyst insight indicates that the stock’s allure lies in its growth trajectory against the backdrop of a troubled market.

Amazon’s financial ratios further illuminate its standing: the company’s price-to-sales (P/S) ratio stands at 4.0, significantly higher than the S&P 500’s 3.1. Additionally, Amazon’s price-to-operating income (P/EBIT) ratio is 41.4 compared to the benchmark’s 24.4. This suggests that while Amazon’s stock may be expensive, its performance metrics point towards underlying operational strength.

Moreover, Amazon’s revenues saw substantial growth of 11.9% over the past year, climbing from $554 billion to $620 billion, outpacing the S&P 500’s growth of 5.6%. Its quarterly revenues also witnessed an increase of 11.0%, moving from $143 billion to $159 billion year-over-year, highlighting the company’s resilience in a competitive market landscape.

Investor sentiment indicates some concerns regarding Amazon’s profit margins, which presently hover around the median for companies within its coverage universe. Over the last year, Amazon reported an operating income of $61 billion, resulting in a moderate operating margin of 9.8%. This figure contrasts with the S&P 500’s median operating margin of 12.6%.

Still, Amazon’s debt levels appear manageable. As of March 3, 2025, Amazon held $135 billion in debt against a market capitalization of $2.2 trillion, resulting in a modest debt-to-equity ratio of 5.4%, significantly lower than the S&P 500’s 19.7%. With cash and cash equivalents totaling $101 billion, the company maintains a strong cash-to-assets ratio, registered at 15.1%, suggesting a solid financial safety net.

Interestingly, AMZN’s stock has demonstrated resilience during recent downturns in market conditions. For instance, from January to December 2022, AMZN stock declined 52.0% from a high of $170.40, while the S&P recorded a peak-to-trough decrease of 25.4%. However, AMZN swiftly recovered to its pre-crisis highs by February 2024, a notable rebound that showcases its resilience to market volatility.

When analyzing Amazon across multiple parameters—growth, profitability, financial stability, and downturn resilience—experts categorize its overall strength as strong. This mixed performance has led experts to conclude that while attractive, AMZN remains a tricky pick for investors seeking stability amid a historically volatile landscape.

Investors wary of volatility may wish to consider diversified portfolios, such as the Trefis HQ Portfolio, which boasts a collection of stocks that have consistently outperformed the S&P 500 over the last four years, providing a steadier return versus the unpredictable nature of individual stock performance.