A brewing trade war between the United States and China has, at least for now, de-escalated following an agreement that will temporarily dial back tariffs the two countries had levied against each other. E-commerce giant Amazon (AMZN 0.18%) rallied on the news -- over half the goods on its platform come from China.
Think you've missed the boat on Amazon stock? Guess again. Here are three reasons it could be the smartest growth stock you can buy today with $250.
1. Let's start with the obvious: tariff relief
The trade agreement signals a strong willingness from both parties to avoid an all-out trade war that would threaten the economies of both countries.
According to Statista, more than 70% of the products sold on Amazon come from China. Prolonged tariffs on Chinese imports, totaling as much as 145% prior to the agreement, would ratchet up prices on goods, turning customers away. Merchants waiting to replenish their inventory faced potential shortages.
The deal reversed the reciprocal tariffs on both sides for 90 days, lowering the total U.S. tariff on China to 30%. That could still raise prices, but it may not be such a shock that consumers freeze their purchasing habits completely.
It doesn't guarantee the trade war won't heat back up, but it's a definitive step in the right direction. It also buys time for companies like Amazon to plan around it for the future.
Image source: The Motley Fool.
2. Long-term cloud tailwinds
Despite representing under 20% of first-quarter 2025 revenue, its cloud computing segment, Amazon Web Services (AWS), contributed over 62% of its operating profits. The cloud business is the company's metaphorical golden goose. It's also Amazon's second-fastest-growing business, which increased sales by 17% from a year ago, only outdone by the 18% growth put up by its advertising unit in the 2025 first quarter.
Some may knock the company for AWS' growth falling a hair short of analyst estimates in the first quarter, but that seems like noise once you zoom out and look at the bigger picture. Amazon is the world's leading cloud platform, with an estimated 30% of the global market. It will be a foundational layer for artificial intelligence (AI), which primarily functions through the cloud.
Research by Future Market Insights estimates that the market opportunity for hyperscale cloud services will grow to over $765 billion by 2035, an 11.6% annualized growth rate.
Investors can look to Amazon Bedrock to see this in motion. Bedrock enables cloud customers to build AI applications using multiple foundational AI models from developers like Anthropic, Meta Platforms, and DeepSeek, through a single interface. Naturally, those applications then run on AWS. It's a fantastic mousetrap for AI end users.
So, while it's tempting to harp on quarterly estimates, the long-term trends favor all the major cloud providers. Amazon is bound to be a big part of that.
3. The stock still offers compelling value
Despite Amazon's newfound momentum, the stock is still in a good spot for buyers willing to buy and hold for the long haul. It currently trades at a price-to-earnings ratio (P/E) of 34. And analysts estimate that the company will grow its earnings by an average of 19% annually over the long term. That's a price/earnings-to-growth ratio (PEG) of less than 2, and I generally feel comfortable buying high-quality stocks at PEG ratios up to 2.5.
In other words, Amazon's valuation is attractive for its strong fundamentals and anticipated earnings growth.
Investors should feel confident in Amazon's ability to sustain high growth because its core businesses have a lot of tread left. The cloud should continue to grow, as discussed, and e-commerce accounts for only 16% of total retail spending in America. Amazon has opportunities to build its footprint in groceries and other staples, healthcare, and even big-ticket purchases like automobiles.
That's not even getting into the digital advertising segment, which generated $56.2 billion in revenue last year and grew 18% year over year in the first quarter. It could realistically be a $100 billion business segment by 2030.
A continuous push for expansion and innovation has fueled its multi-decade journey to becoming one of the world's largest companies and best-performing stocks. Don't overthink things: Amazon is arguably the smartest stock to buy with $250 right now. You may not find a more proven company with such high long-term upside.
