Check out the latest Amazon stock news. (NASDAQ:AMZN) stock made headlines this week when it briefly surpassed $1,000 per share, achieving a new all-time high of $1,001.20. While the stock has pulled back to about $992 at the time of this writing, its recent rise makes it a good time to evaluate its potential as an investment.

Have interested investors who haven't bought shares yet completely missed out? Should long-term investors cash out and take their gains? After all, shares are up about 39% in the past 12 months and an incredible 217% in the past three years.

AMZN Chart

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Bull case

Amazon's combination of a leadership position in e-commerce and enterprise cloud solutions, consistent rapid revenue growth, and improving profitability makes for an outstanding long-term investment. And there's no sign that it won't continue benefiting from these drivers over the long haul.

Amazon's revenue growth drivers are broad-based, including 24%, 16%, and 43% year-over-year growth in its North America, international, and Amazon Web Services (AWS) segments in the company's most recent quarter. 

AWS is proving to be a particularly strong catalyst for Amazon. While the segment's total revenue is dwarfed by Amazon's e-commerce sales, AWS' operating profit now represents the majority of the company's overall operating income. For instance, in the first quarter, AWS operating income accounted for 89% of total operating income, up from 56% of operating income in the year-ago quarter.

Furthermore, while Amazon's quarter-to-quarter free cash flow trends still take a hit occasionally as the company frequently turns to heavy investments to take advantage of growth opportunities, Amazon's free cash flow is rising sharply on a trailing-12-month basis. Free cash flow in Amazon's trailing 12 months was $10.2 billion, up from $6.7 billion in the preceding 12-month period.

Bear case

While even Amazon stock's biggest critics may have a tough time denying the e-commerce giant's dominance and long-term opportunity in e-commerce, the company's bread-and-butter cloud services segment, AWS, could see its profit margins come down in the future if well-capitalized tech giants decide to step up their bets on the market. Apple, Alphabet, and Microsoft all have far more free cash flow to spare than Amazon; and a reinvigorated effort to gain market share in cloud services from any of these tech juggernauts could ultimately lead to lower prices and narrower profit margins.

Amazon's e-commerce business may also face more uncertainties in the future than it would seem on the surface. International markets, in particular, could present challenges that are unique to their local markets, including regulatory hurdles, different cultural dynamics, and local competition.

Finally, it's possible that Amazon's narrower operating margin in its most recent quarter compared to the year-ago quarter will not be as temporary as investors are hoping. Amazon's North America segment operating margin in the first quarter was 2.8%, down meaningfully from 3.5% in the year-ago quarter. While Amazon CFO Olsavskly explained this lower operating margin by pointing to the company's opportunistic aggressive investments in its business, it's always a possibility that this more recent operating margin is more representative of what is sustainable.

Group of people analyzing various financial charts

Buy, sell, or hold? Image source: Getty Images.

Overall, Amazon's strong competitive position, broad-based growth, and rising free cash flow stand out above the risks of a potential margin erosion over time and uncertainties associated with international expansion. Despite the higher stock price, Amazon continues to give investors strong reasons to bet on the stock.

Even at $1,000, I'm calling Amazon stock a buy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.