Amazon (AMZN -0.01%) is limping into 2023, and it's probably eager to turn the page on a new chapter.

The tech giant is on track for one of the slowest-growth years in its history. It's lost nearly $8 billion in its e-commerce-focused businesses through the first three quarters of 2022, and it announced the first major layoffs in the company's history, including 10,000 from its corporate workforce. Among the divisions especially targeted is Alexa, because Amazon is reportedly losing $10 billion a year on this voice-activated technology.

In other words, Amazon is in a strangely defensive position after years of gobbling up market share in industries as diverse as e-commerce, books, cloud computing, video streaming, and digital advertising. 

The good news for investors is that those headwinds have probably been priced in to the stock. Amazon's shares have fallen 50% from their peak last year, setting up a potential buying opportunity.

A person opens a delivered package while sitting on a couch.

Image source: Getty Images.

What to expect from Amazon in 2023

While the macroeconomic environment is uncertain going into next year, there are some reasons to expect Amazon's performance ought to improve. 

For starters, the company will be facing much easier comparisons in 2023. Revenue has increased just 9.7% through the first three quarters of the year, and that's expected to slow in the fourth quarter when the company has guided to just 2%-8% growth.

A strengthening dollar has also weighed on results this year, and those headwinds should fade next year as the dollar has begun to cool off since hitting its peak in September.

Additionally, the tech titan is likely to see some margin improvement. CEO Andy Jassy is focused on trimming or eliminating wasteful projects. In addition to cutting back on the losses at Alexa, Amazon is also shuttering businesses like Amazon Care, its pilot program in telehealth and in-person healthcare; Scout, its home delivery robot; and Fabric.com, an e-commerce site for sewing supplies.

The company has also closed or canceled plans for dozens of warehouses, a sign that it overestimated its e-commerce growth trajectory during the pandemic. 

Amazon has a number of high-margin businesses, including Amazon Web Services (AWS), advertising, and its third-party marketplace, the latter which enables it to collect commissions and fulfillment fees from the thousands of merchants who sell on its website.

However, the company's financial results show that it still has a lot of wasteful spending. For example, Amazon loses money nearly every year in its international segment, showing it may be spreading itself too thin in emerging and smaller markets abroad. Similarly, there's a good argument that the company is spending too much on Prime Video. It's set to shell out more than $15 billion this year on streaming content -- more than even Netflix -- and Amazon doesn't even directly monetize that spending, using it instead to drive Prime memberships.

Given the company's myriad experiments, there are likely plenty of other unfruitful projects in need of pruning.

Is Amazon a no-brainer buy for 2023?

Looking at the company's cost cuts and the strength of its high-margin businesses like AWS, advertising, and marketplace, it's clear that Amazon could be significantly more profitable than it is today.

Jassy seems to recognize the need to deliver greater profitability because maintaining strong revenue growth will become more difficult given that total revenue is expected to top $500 billion this year. 

With shares down 50% and the market capitalization under $1 trillion, the stock looks cheap. AWS alone is on track to deliver $23 billion in operating income this year, meaning Amazon shares are valued at roughly 40 times that amount.

Whether the business bounces back next year will depend on the macroeconomic environment, but at the current stock price, the worst already seems priced in. Owning shares of Amazon going into 2023 could set you up for an easy double over the next year or two, and your losses are likely to be limited unless the country enters a deep recession.