It's not easy to keep up with everything going on at Amazon (AMZN 0.89%) these days. The company has expanded well beyond its e-commerce beginnings and has its finger in many pies. It looks qualitatively different from the way it did even three years ago, and the only thing you can really imagine with confidence three years from now is that it will look quite different again.
However, you can see some of the directions it's moving in now that give clues to where it might be expanding, and based on this, one can make some judgments as to whether it's worth investing in today.
E-commerce juggernaut
The acceleration of e-commerce when the pandemic started made only the slightest dent in Amazon's share of U.S. e-commerce. It stands at 38%, with no real competition. And it constantly improves its game, making it exponentially more difficult for any challenger to pose any sort of threat.
NASDAQ: AMZN
Key Data Points
Recently, management said that it continues to speed up delivery, with more than half of orders in the top 60 metro areas being delivered within a day. It has its top 100,000 best-selling products at same-day delivery centers in major delivery hubs, plus millions more nearby, and it can get an order ready in as little as 11 minutes. It's hard to imagine that getting any faster, but management is looking to double its count of same-day delivery hubs, and it should be fulfilling more orders at that speed over the next few years.
In three years, it's likely to be getting even more orders to customers within a day or two. The new regional fulfillment structure is also more cost efficient, which should help Amazon get back to improved profitability.
Cloud computing giant
Amazon's other major business right now is Amazon Web Services (AWS), which is also the leader in cloud computing services, although at a margin not quite as wide as e-commerce.
Again, the company is investing in product enhancement to maintain its top position. It has doubled down on generative artificial intelligence (AI), which looks like it's more than the most recent buzzword. Its practical applications are far-reaching, and they could change the way developers work. Amazon is far from the only innovator here, but it's padding its competitive advantage with a robust suite of services for its clientele.
It released several new features that make it easier and cheaper to run models, as well as new services that allow developers to write generative AI applications. This is just the beginning, and as generative AI becomes more powerful, AWS will too. It's competing against similarly strong contenders like Microsoft and Alphabet's Google, and all of them, in addition to smaller companies, will benefit long term. Amazon's focus on price gives it an edge even now, and that could help it keep the lead going forward.
Healthcare upstart
Amazon's healthcare business is a tiny fraction of the whole right now -- so small that the company doesn't break out its sales. It's officially been in the healthcare business since 2018, when it launched a start-up called Haven with JPMorgan Chase and Berkshire Hathaway, which ended in 2021. It also launched Amazon Care, a similar telehealth service for Seattle employees, in 2019 that ended with the acquisition of One Medical last year. It started Amazon Pharmacy in 2020, and customer count doubled year over year in the second quarter.
These are all fairly new investments for Amazon, but it looks like an area that the company is set on exploring and succeeding in. In three years, it could be a major part of Amazon's business.
More industries to disrupt
The same innovation machine that created AWS, just-walk-out shopping technology, and the rest of Amazon's segments and disruptive technology are likely to bring about new and improved products and services going forward. These are just a small sample of Amazon's many businesses and services, and these will almost certainly grow and get better.
Amazon stock has created incredible shareholder wealth over time, and it should continue to reward investors for the next three years and long after.
