No conversation about successful investing would be complete without a hat-tip to legendary Berkshire Hathaway (BRK.A -2.00%) (BRK.B -1.83%) CEO Warren Buffett. The so-called Oracle of Omaha has steered the conglomerate for over five decades, racking up returns that may never be matched. In fact, since taking the helm back in 1965, Berkshire Hathaway has generated gains of roughly 20% annually. 

As the recovery of major market indexes begins to pick up steam, investors are scouring Buffett's portfolio for inspiration. One stock that looks like a particularly compelling opportunity right now is Amazon (AMZN -3.06%). The e-commerce pioneer isn't getting much respect from Wall Street these days, and its stock is still down 28% from its peak. Yet despite recent macroeconomic challenges, it's far from a company in jeopardy. Investors appear to be ignoring its strong history of growth, several industry-leading positions, and long and distinguished track record of success.

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Amazon didn't invent digital retail, but it may have perfected it

While its initial claim to fame was as an online bookstore, it didn't take long before Amazon realized it could apply its digital retail strategy to any product, earning it the moniker of "the everything store." The rest, as they say, is history. While estimates vary, Amazon is widely recognized as the worldwide leader in e-commerce, generating revenue of more than $514 billion in 2022. There's more. Amazon controls roughly 38% of digital retail in the U.S., more than its next 14 competitors combined, and accounts for approximately 45% of all e-commerce site visits. 

Yet investors have built a wall of worry, fearing the company's best growth is behind it. The company's most recent results gave those fears credence. In the first quarter, net sales of $127 billion increased just 9% year over year, a far cry from Amazon's pandemic-era growth of 44%. 

However, the economic headwinds of the past 18 months are only now beginning to abate, which bodes well for the online sales leader. The global e-commerce market is expected to expand from $3.3 trillion in 2022 to $5.4 trillion in 2026 and represent 27% of all retail, according to data from Morgan Stanley. As the market leader, Amazon is well-positioned to reap the rewards of the ongoing growth of digital retail.

Head in the clouds

E-commerce isn't the only area that Amazon dominates. The company is also the undisputed leader of the cloud infrastructure market, a segment it pioneered. During the first quarter of 2023, Amazon Web Services (AWS) grew revenue 16% year over year and controlled 32% of the market -- as much as Microsoft's Azure and Alphabet's Google Cloud combined, which account for 23% and 9%, respectively, according to Canalys. 

What's more, the global cloud computing market is expected to increase from $546 billion in 2022 to $1.2 trillion by 2027, expanding by nearly 18% annually. If history is any guide, Amazon will continue to capture its share of this large and growing market. 

It all 'ads' up

If e-commerce and cloud computing weren't enough, there's another area where Amazon has quickly become a contender. The company has risen rapidly through the ranks to become the third-largest digital advertiser in the U.S., joining existing leaders Google and Meta Platforms. Interestingly, even as the downturn caused ad revenue to slump, Amazon bucked the trend. In 2022, Amazon's digital advertising revenue increased 19%, outperforming the results of its rivals. For context, Google's ad revenue climbed 7%, while Meta Platforms declined 1% -- illustrating the strength of its offering. 

To be clear, Amazon's digital advertising revenue may never achieve the sheer magnitude of its rivals, but this shows how quickly the company can use its unmatched scale to become a force to be reckoned with.

The next pillar of Amazon's growth?

Because the company has irons in so many fires, it's difficult to pinpoint exactly where Amazon's next big growth engine will come from.

The company's Prime subscription service is more than 200 million strong and growing, giving the company significant scale in streaming video. Amazon significantly boosted the value of its catalog last year, closing its $8.5 billion acquisition of MGM Studios. 

Amazon also has a long history of tapping artificial intelligence (AI) to power its product and video recommendations, as a key element of its Amazon Web Services (AWS) cloud infrastructure offering, and to underpin Alexa and its Echo smart speaker technology line. CEO Andy Jassy believes recent advances in generative AI will prove to be "one of the biggest technical transformations of our lifetimes" and is working to identify the specific applications that will best serve Amazon and its myriad customers.

There's simply no way to know whether it will be an existing business line -- or something completely new -- that will spur the next leg of Amazon's growth. Still, given the breadth of its business interests, the company will likely make a name for itself in yet another industry.

A compelling bargain

There's little doubt the high inflation and economic challenges of the past couple of years have taken a toll on Amazon, but this, too, shall pass. Investors focusing solely on slowing e-commerce growth, however, may be missing the forest for the trees. As a result, the stock is currently selling for a song, trading for roughly more than 2 times next year's sales, near its lowest price-to-sales ratio since 2014. 

It's also worth noting that over the past decade, Amazon's revenue has surged 645%, driving its net income up 1,220% and sending its stock price up 770% -- despite the recent downturn.

Considering its industry-leading positions in e-commerce and cloud computing, its strong and growing presence in digital advertising, and its bargain-basement price, Amazon stock is a buy -- before Wall Street comes to its senses.