Is this a once-in-a-generation opportunity to buy Amazon stock?

Amazon (AMZN -0.24%) the stock has gained 190,400% over its lifetime. If you had invested $1,000 when it first went public, you would have over $1.9 million today.

That was almost 30 years ago. Could investing in Amazon today be a once-in-a-generation opportunity? Let’s see why that might be.

Winners keep winning

Investors looking for the next big thing can sometimes miss the tremendous opportunity right in front of their eyes. Many shareholders regretted selling too early because a stock had already become a multi-bagger.

Amazon may have already produced life-changing earnings, but it could continue to be a stellar stock to own for the foreseeable future. I qualify this by saying that it would be almost impossible for it to repeat the same gains it has made so far, but it still has incredible prospects to be a market-beating stock over the long term.

He’s a master at developing new business, which is why he’s such a sure bet for growth. In the past it was e-commerce and then cloud computing. It has become by far the dominant company in both fields, with such a head start, especially in e-commerce, that it would be difficult to dethrone in the near future. Total sales rose 10% year over year in the second quarter, and Amazon Web Services (AWS), the cloud computing segment, accelerated to 19% sales growth. There are plenty of tailwinds for both businesses as well.

Amazon has several smaller fast-growing businesses, especially advertising, and today its tailwinds come from the artificial intelligence (AI) revolution. CEO Andy Jassy said: “I don’t know if any of us have seen this kind of possibility in technology in a very long time, certainly from the cloud, maybe from the Internet.” Although still in its infancy, the generative AI business already has a multi-billion dollar revenue run rate.

Management sees its advantage in its flexibility. His feedback suggests that customers are looking for options, not a one-size-fits-all approach. They want customization and are also looking for solutions that compete on price. Amazon is developing its own chips to meet these requirements. It already offers a wide range of services and levels of customization to suit all needs, and Jassy said it has “released more than twice as many machine learning and generative AI features into general availability than all other major cloud providers combine”.

Once in a generation?

Okay, so Amazon is using its leading AI platform to power a market of perhaps a trillion dollars, and it has a lot of opportunity in its legacy segments. But why is it once in a generation?

For that part, let’s go back to the Amazon rating. Amazon shares are trading at their lowest P/E ratio in more than a decade.

AMZN PE report data by YCharts.

Since the last time Amazon traded around this level (in 2010) to date, Amazon stock has gained over 3,000%.

A low rating can mean a few things. It’s often an indication that the market doesn’t see much of a future for the stock. Another is that the market sees it as risky. A third could be the market expects the growth of well-established companies to slow.

In Amazon’s case, the stock fell after Amazon’s second-quarter report. That’s guidance for revenue slightly lower than the average analyst estimate of $157 billion.

But the P/E ratio has fallen over the past year. There is clear pessimism in the market here, despite Amazon’s strong performance and opportunities. With lower interest rates and a stronger economy to follow, Amazon has positioned its business well to eventually overcome market pessimism. And because it has a history of surprises, Amazon stock may be undervalued right now. That’s why this looks like a potentially solid opportunity that investors may not see again anytime soon.