Amazon (AMZN -1.26%) is a business that needs no introduction. The self-proclaimed world's most customer-obsessed company, this tech behemoth has become a mission-critical organization that individuals, enterprises, and governments across the world likely interact with on a daily basis.

Its rise over the past three decades has been nothing short of spectacular. And there's no doubt that Amazon has made many early investors rich beyond their wildest dreams.

Is this FAANG stock a buy, sell, or hold right now? Let's take a closer look at Amazon.

A bounce-back year

Following a surge in online shopping during the days of the pandemic, Amazon's business faced a slowdown in 2022, as sales rose by just 9.4% last year. Blame it on consumer pessimism, higher interest rates, or inflationary pressures, but the company stopped registering rapid growth that investors were accustomed to.

And this helps explain why the stock got absolutely clobbered in 2022, losing 50% of its value.

But this year has brought a renewed sense of optimism. Management has instituted cost cuts to drive a more efficient organization, a strategy that was much needed after the business invested heavily in its logistics footprint in 2020 and 2021. This is happening at the same time that revenue growth is starting to bounce back nicely.

In the most recent quarter (the third quarter of 2023 ended Sept. 30), Amazon's sales rose 13% year over year. Perhaps more encouraging, operating income soared 348% to $11.2 billion.

In the fourth quarter, the leadership team expects revenue to rise between 7% and 12%, with operating income more than tripling from the year-ago period (at the midpoint). These forecasts make it easy to be bullish.

Numerous advantages

While many tech stocks, especially those of smaller and unprofitable companies, can be viewed as extremely risky investments, I believe Amazon is a safer business to own.

That's because of just how important its products and services, like Prime and Amazon Web Services (AWS), for example, are to customers. Just think about the disruption that would happen if these offerings disappeared overnight. That's the mark of a company's quality.

According to Statista, Prime has more than 200 million members worldwide. This gives Amazon a stable and recurring revenue stream, while at the same time driving customer stickiness from shoppers. When you have free and fast shipping on millions of products, access to award-winning media content, and other benefits, the value proposition speaks for itself.

Amazon's advantages, particularly as they relate to the company's huge scale and virtually unlimited financial resources, will certainly play a part in the ongoing artificial intelligence (AI) wars. More specifically, with AWS, Amazon has an industry-leading service that can continue investing in to advance its AI initiatives.

For example, AWS customers can use Bedrock, a service that allows these clients to develop their own generative AI models using Amazon's tech infrastructure.

This has the potential to further bolster AWS in the competitive cloud market by making it more critical to its customers' operations. And for Amazon as a whole, this means more opportunities to generate revenue with additional service offerings. AWS has typically grown sales at a faster clip than the overall company, while producing incredible operating margins. This could provide a lift to Amazon's profitability in the years ahead.

The investor perspective

Armed with a better understanding of Amazon, we must now return to the original question of what investors should do about the tech giant's stock. I believe the smartest decision is to buy shares right now.

Not only is this business experiencing accelerating sales growth, but Amazon also has competitive advantages that should allow it to stay at the forefront of the various industries it operates in. And when it comes to AI, Amazon will be a major player going forward , which can draw in investors looking to gain exposure to this revolutionary technology.

Plus, the company benefits from multiple secular tailwinds, including online shopping, cloud computing, digital advertising, and streaming entertainment. Investors who are concerned that Amazon's massive size will inhibit growth should keep these underlying trends in mind. Rising with the ongoing prevalence of the internet, these trends have been going on for decades, and they will only become more important in our lives.

Despite the stock's epic rise in 2023, it doesn't look that expensive. Shares currently trade at a price-to-sales multiple that's below the historical 10-year average.

Adding Amazon to your portfolio should prove to be a smart investing decision.