Have $500? 2 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now.

AWS drove Amazon's profitability—accounting for ~57% of 2025 operating income—with Q4 AWS sales up 23.6% to $35.6B and operating income up 17.2% to $12.5B; Amazon projects capex of ~$200B vs $131.8B in 2025 and holds a 28% cloud market share (Azure 21%, Google 14%), while its P/E has contracted from 36 to 30 and shares are up ~7% Y/Y through Mar 6 vs the S&P 500's 18.3%. Target posted comps down 2.6% last year (Q4 comps -2.5%) but new CEO Michael Fiddelke expects slight comps growth and operating margin expansion from 4.6% to 4.8%; Target shares are up ~5% Y/Y and trade at a P/E of 15 (five-year median 17). Overall, the piece is constructive on long-term fundamentals for both names despite elevated capex at Amazon and recent sales softness at Target.

Analysis

Amazon’s aggressive capital cycle is reshaping upstream markets more than headline cloud share numbers suggest. Heavy capex focused on AI infrastructure favors suppliers with GPU/IP-weighted roadmaps and scale logistics — expect outsized order flow into high-end accelerator ecosystems and power/transformer vendors, while commodity server OEMs face margin compression; timing mismatches between spend and monetization create a multi-quarter volatility window even if secular demand stays intact.

Target’s pivot back to differentiated merchandising is a structural margin trade, not just a comps recovery story. If executed, it will compress price-led traffic to discounters by shifting SKU mix toward higher-margin owned/partner brands and increasing turnover; that amplifies earnings per customer even on flat traffic, and produces a multi-year re-rating if private-label penetration and supply-chain reconfiguration (regional DCs, vendor exclusives) hold.

Key risks and catalysts are asymmetric across horizons. Near-term (days–months) catalysts: quarterly cadence and inventory reads that will re-price confidence; medium-term (6–18 months) catalysts: AI capex cadence and GPU supply routing, plus Target’s merchandising KPIs (private-label mix, comp trends). Tail risks: a prolonged macro pullback or regulatory intervention that re-orders hyperscaler procurement or forces retail price reinvestment will rapidly reverse current sentiment.

Key Decisions for Investors

• Long NVDA via calendar/LEAP call spread (12–24 month horizon): buy 12–24 month calls and sell higher strikes to fund cost — rationale: leveraged exposure to hyperscaler GPU demand from large capex cycles. Risk: limited to upfront premium; Reward: asymmetric if NVDA continues to capture accelerator volume (target 2–4x payoff if data-center GPU TAM growth continues).
• Accumulate AMZN on structural pullbacks (12 month ladder) and buy 1–2 year protective puts as hedge: use staged buys on 12–18% dips to capture long-term infra moat while capping downside with purchased puts. Risk/Reward: equity upside if AI monetization accelerates over 2+ years; cost of puts is insurance against execution or macro-driven multiple compression.
• Pair trade — Long TGT / Short WMT (6–12 months): overweight Target to express merchandising-led margin expansion vs Walmart’s scale-price position. Position sizing: modestly long TGT (3–5% portfolio) funded by a smaller short in WMT; Stop-loss: tighten if TGT fails to show sequential improvement in private-label mix or if Walmart accelerates share gains. Expected outperformance: 300–500 bps if execution is successful.
• Directional short INTC as a hedge against NVDA/AMZN exposure (12–24 months): express the risk that AI capex disproportionately benefits accelerator-first vendors over traditional CPU incumbents. Use small-sized puts or short futures to limit capital; Risk: Intel product roadmap wins or IDM advantages could cause sharp mean reversion.