Just be careful on these rapid upticks, and be prepared to bail out if you went in too aggressively.
Do not think of Amazon as a large corporation (even though they are). Instead think of it as a network of startups under one corporate umbrella, with a unified management philosophy. That philosophy is reflected in publicly available documents like https://www.amazon.jobs/principles.
The mature startups spin off an amazing amount of free cash. That cash is reinvested into new startups. The philosophy is that as long as Amazon has a good management structure, and is good at identifying opportunities, their startups will succeed at a higher rate than the general market. You still have to kill a lot of them, but the successes join winners like AWS and fund new ideas.
They can pivot to profitability on a dime by simply killing a lot of their internal startups. They can keep earnings at zero by simply funding new startups.
If you see Amazon's growth stop, or you see them taking profits, then they have shifted to being a different kind of company. Wake up, take notice, and re-evaluate. Until one of those two things happens, their P/E ratio will be ridiculously high and it will not matter.
The two things that I see as long-term threats for Amazon are as follows.
1. Word about how bad they are to work for becomes sufficiently widespread among prospective top employees that recruiting becomes a challenge.
2. Some of their mature businesses start to fail, but are embedded strongly enough in the organization to make getting rid of them hard.
Of those, the first seems closer to being an immediate issue. Though it is hard to believe that their reputation could become SO bad that it would really kill them. The second is likely the bigger long-term threat.
I'd say word about Amazon's working environment is heavily overblown. There are many people who have worked there for years on end and greatly enjoy the experience, and their reputation still allows them the pick of the litter of any Comp Sci/MBA graduates.
Their leadership principles require people to have no defensive behavior. Their actual organization style makes it very easy to create defensive behavior. As long as you and those in your immediate environment are not defensive, the result works very well. However when defensive behavior gets tripped with people who are pretending not to be defensive, things very quickly go pear shaped.
Source, my personal observations from having worked there, combined with many conversations after I left with people who also left. One of whom had not only been there for years, but for most of that time was one of the people who would be brought in to sell wavering recruits because of how loudly he sang their praises as a place to work.
That's not necessarily fair. To the parent's point - if investors get spooked they would bail, much quicker and harder than if traditional fundamentals were there.
You can understand Amazon's strategy while being cautious about certain P/E ratios or fundamentals. The higher it gets the more future growth is priced in and if something goes wrong it could go really bad. The market believes Amazon can dominate any category. That's significant to their valuation. What if you have a failure in grocery and other categories? That peachy confidence could erode quickly.
When you look at Apple's history of identifying worthwhile business opportunities, it was all driven by one man - Steve Jobs. He is dead. And anyone else with his abilities is more likely to create a startup than to join Apple, spend decades rising the corporate ladder, and then reveal an unexpected talent for creating entirely new lines of business that undermine existing ones.
If they're not buying anything they should repurchase stock or pay dividends, but either way, you can totally see they don't have a clear M&A strategy.
I mean, Beats? Shazam?... Apple has the financial power to buy a large supplier and reduce costs by vertically integrating their supply chain but they rather choose to pursue opportunities that have little to no impact on their added revenues.
They keep hoarding cash. None of that cash has been deployed or reinvested in a meaningful way. Their stock repurchase plan and dividend payments have been pretty miserable for a company with that amount of disposable cash.
From the top 10 biggest annual dividends payers in S&P 500, Apple is the most stingy. Their yield is 1.72%. Compared to other companies with yields of up to 5% (like AT&T), that's actually a shitty dividend payout.
Tim Cook announced Jan 17 that he intends to bring most of the money back, and pay close to $40 billion in penalties. Presumably a lot of that will get returned to investors or reinvested in some way.
That's a funny way to pronounce lowered taxes.
Or atleast that's what my current thought is regarding this topic.
EDIT: not sure why the downvotes, but maybe because I'd incorrectly assumed earnings to a non-negative number. Still TSLA's P/E is N/A according to the few sites I've checked:
https://finance.yahoo.com/quote/TSLA/
https://www.nasdaq.com/symbol/tsla
TSLA had price per losses ratio something like -30 last year.