Amazon's (AMZN 1.19%) business exploded over the last decade, with its share price up nearly 990%.
The company has become a tech behemoth and a household name worldwide. It has dominated e-commerce with its retail site, achieved a leading market share in cloud computing with Amazon Web Services (AWS), expanded its artificial intelligence (AI), and even dabbled in video games, grocery, and space satellites.
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As a result, an investment of $10,000 a decade ago would be worth over $107,000 today. The company made many millionaires over the last decade, begging the question: Does it still have much to offer new investors?
Let's examine Amazon's business more closely and determine whether it's still worth investing in in 2024.
Beating analysts' expectations for four consecutive quarters
Like many companies, Amazon hit a rough patch in 2022. Macroeconomic headwinds plagued the tech world and saw Amazon's stock plunge 50% through the year. Spikes in inflation curbed consumer spending and caused a steep decline in Amazon's retail profits.
However, the company's business made an impressive turnaround since then. A slew of cost-cutting measures and easing inflation put Amazon on a solid growth path that has shown no signs of slowing.
| Quarter | Earnings Per Share | Revenue |
|---|---|---|
| December 2023 (Q4) | Beat 24.4% | Beat 2.2% |
| September 2023 (Q3) | Beat 58.7% | Beat 1.1% |
| June 2023 (Q2) | Beat 89.6% | Beat 2.3% |
| March 2023 (Q1) | Beat 44.3% | Beat 2.2% |
Amazon's earnings beat Wall Street forecasts for four consecutive quarters, benefiting from a strong comeback in its retail segments and cloud growth. In the fourth quarter of 2023, total revenue rose 14% year over year to $170 billion. Meanwhile, operating income hit $13 billion, a significant improvement from the $3 billion it posted the year before.
Amazon's next earnings release is scheduled for April 30, with many analysts predicting positive results. Improvements in retail are likely to continue alongside AI-driven growth from AWS and increased advertising earnings. As a result, it could be a smart move to make a long-term investment in Amazon's stock now ahead of its next quarterly earnings release.
Amazon has growth catalysts scattered throughout tech
One of the best reasons to invest in Amazon is its deep economic moat. For those unfamiliar with this term, "economic moat" is often used to describe a company's ability to maintain a competitive advantage over its rivals and retain its market share.
Amazon built up its moat in multiple industries. The company holds a 38% market share in e-commerce in the U.S., compared to Walmart's second-largest market share of just 6%. Meanwhile, Amazon has achieved a leading 31% market share in cloud computing, outperforming rivals Microsoft Azure and Alphabet's Google Cloud.
NASDAQ: AMZN
Key Data Points
Amazon's wide reach is especially promising for its gradual expansion into the $200 billion AI industry. The company is using its supremacy in the cloud market to get ahead of its rivals in AI.
Last year, Amazon responded to increased interest in AI by expanding its library of AI services on AWS. The company debuted Bedrock, a tool that helps clients build generative AI applications, and Codewhisperer, which makes developers' lives easier by accurately generating code.
Over the last 10 years, Amazon's annual revenue rose 546%, while operating income skyrocketed over 20,000%. In fact, in the last year alone, its free cash climbed 904% to $32 billion.
The company is one of the biggest names in the high-growth tech market, with vast financial resources to continue investing in its business and keep up with its competitors.
Data by YCharts
Moreover, Amazon is one of the best bargains in tech, with the lowest price-to-sales ratio (P/S) among some of its rivals. P/S is calculated by dividing a company's market cap by its trailing 12-month revenue. As a result, the lower the metric, the better the value. Amazon's stock is potentially trading at a far better value than its peers', including Apple, Microsoft, Alphabet, and Meta Platforms.
Amazon's significantly lower P/S, alongside its potent position in tech, make its stock a screaming buy right now. The company is on a promising growth path you won't want to miss out on.
