There's no doubt that Amazon (AMZN 1.73%) is a magnificent stock. Not only has Amazon improved the lives of countless consumers worldwide, but the stock has also generated life-changing wealth for those who have held shares over the past few decades.
No, a 10% decline in Amazon's share price doesn't make for an exciting headline. Still, the stock's price-to-earnings ratio of 32 is a solid entry point for a business that analysts expect to grow earnings by an average of 22% annually over the next three to five years.
Investors can look even further out, and should -- Amazon has a bright future ahead.
Here are four reasons why you should consider buying this dip on Amazon and holding the stock for the long term.
Image source: Amazon.
1. E-commerce is still in its early innings
There's much to discuss with Amazon, but everything started with e-commerce. Amazon began with books and has evolved into a logistics juggernaut that enables someone to order almost anything conceivable from its online store and get it quickly, sometimes within hours.
But for as long as online shopping has been a thing, there is still a lot of juice left to squeeze from the e-commerce fruit. E-commerce accounted for just 16.3% of total retail sales in the United States during the second quarter of this year.
Amazon is the runaway leader, with an estimated 40% of America's e-commerce market. It has an unmatched supply chain that enables it to fulfill and deliver orders more efficiently, effectively, and cost-effectively. That means it will likely continue winning as e-commerce matures.
There is still tremendous upside in grocery and fresh foods, medicine, and even automobiles. Amazon is expanding its operations across all these categories, positioning it to continue winning in the e-commerce space.
2. Amazon leads a growing cloud industry
E-commerce isn't even where Amazon generates most of its profits. That would be its cloud computing segment, Amazon Web Services (AWS). AWS is currently the world's leading cloud services ecosystem, with an estimated 30% market share.
The cloud is crucial to artificial intelligence (AI), which has added another growth catalyst to an already growing cloud market. Experts believe global cloud revenue could reach $2 trillion by 2030, driven by AI demand, a 22% annualized growth rate between now and then.
AWS contributed 61% of Amazon's total operating income through the first six months of 2025, so continued expansion in the cloud bodes well for the company.
3. Artificial intelligence will likely juice Amazon's profit margins
Looking further out, AI could steadily reduce Amazon's head count and increase its profit margins. AI and robotics could eventually replace or reduce Amazon's customer service, fulfillment, and delivery head count.
Amazon has already begun integrating automation into its distribution centers and introduced drone delivery in select markets. Amazon has even been conducting field tests with humanoid robotics, though widespread application is probably at least a few years out.
The company employs around 2 million people, and even reducing that by 20% to 30% over time would have a significant impact on the bottom line.
4. Additional upside from emerging business segments
Amazon's e-commerce and cloud opportunities are compelling reasons to own the stock, but there are irons in the fire that could add to Amazon's bigger picture over the next decade and beyond.
The company's famous Prime subscription membership has grown to more than 200 million. Prime members receive perks and benefits, including access to Amazon's other services, such as Prime Video streaming.
It has become an ecosystem that Amazon can use to distribute new services, while generating a healthy amount of recurring revenue in the process. For instance, Amazon has begun promoting its new Alexa+, a smarter version of its Alexa home assistant devices, to Prime members. Amazon has also quietly become a behemoth in digital advertising, with revenue hitting $15.6 billion in the second quarter, a 23% year-over-year increase.
Few companies have Amazon's footprint, and its widespread presence, from e-commerce to streaming, makes it a consumer-facing juggernaut that can continue to exert its influence as it pursues new growth opportunities in the future.
No, a 10% dip in Amazon's stock isn't much of a story, but it's hard to find a better stock to buy and hold in today's market.
