Shares of the online retail behemoth Amazon (AMZN 0.90%) have recovered somewhat from a frightening plunge last April. Now, the stock is around 34% below the high-water mark it set last summer.

Is Amazon an excellent stock to buy at its somewhat reduced price? Should cautious investors remain on the sidelines? To answer these questions, let's weigh some reasons the stock is down against reasons it could outperform over the long run.

Why some investors are avoiding Amazon right now

Shares of Amazon have been under pressure since the company reported an uncharacteristic net loss of $3.8 billion during the first quarter of 2022. More recently, the company reported another net loss of $2 billion in the second quarter.

During the early days of the COVID-19 pandemic, Amazon began spending heavily to keep up with demand. Over about a year and a half, the company more than doubled the size of its fulfillment network. But the extra demand didn't last as long as hoped, and the problem has been compounded by a lack of goods due to supply chain constraints. Tack on soaring fuel costs related to Russia's invasion of Ukraine, and it's no wonder the company's losing some money.

Reasons to buy

In the second quarter, Amazon recorded a noncash loss of $7.6 billion related to its stake in Rivian Automotive, the electric vehicle (EV) maker that isn't building Amazon's new delivery vans quite as quickly as promised. Nobody likes to see their investment's investments lose value. But it's important to remember that Amazon acquired a 20% stake in Rivian ahead of its initial public offering last year for just $1.35 billion, and the EV maker's market cap is now at around $30 billion. In other words, Amazon is probably going to come out miles ahead on this investment.

More profits from Amazon's retail operation are likely around the corner. The company swallowed incremental costs related to fulfillment and inflation that amounted to approximately $6 billion in the first quarter. These additional expenses fell to $4 billion in the second quarter, and will likely subside further in the second half.

Long-term investors can look forward to Amazon maintaining its dominant position in both e-commerce and the increasingly lucrative cloud services industry. In 2021, the company hurled a whopping $60 billion at capital investments. Transportation and fulfillment capacity chewed up more than half of the company's capital expenditures outlay, while technology infrastructure that supports Amazon Web Services consumed around two-fifths.

Walmart and Shopify are arguably Amazon's largest e-commerce competitors. Over the past year, they reported less than $15 billion in overall capital expenditures. This suggests that third-party retailers will continue flocking to Amazon for the foreseeable future.

Investors will also be glad to know that Amazon Web Services (AWS) appears capable of maintaining a strong lead in the lucrative cloud services industry. The roughly $24 billion that Amazon spent last year on technology infrastructure alone is more than either of its largest competitors spent to bolster their cloud businesses. Microsoft's entire capital expenditure budget added up to just $23.5 billion over the past year, and Alphabet's total came in at $28.5 billion.

The best price we've seen in a long time

At the moment, you can scoop up shares of Amazon for just 2.6 times trailing sales -- a lower multiple than we've seen since 2016. That's a little surprising, because high-margin cloud service revenue is outpacing contributions from the less profitable e-commerce operation.

Second quarter AWS revenue shot up 37% year over year to $18.4 billion. After subtracting relatively minor operating expenses, operating income from AWS came in at a whopping $6.5 billion. Industry experts and Amazon's management team believe AWS has a long growth runway ahead.

With an e-commerce operation built to remain competitive for decades and a highly profitable cloud business in the early chapters of its growth story, this is a great stock to buy now and hold for the long run.