Amazon (NASDAQ:AMZN) stands out as a diversified global giant, dominating many sectors, from e-commerce to logistics. Despite volatility within the tech sector, AMZN stock has solid financial performance and growth potential make it an appealing choice for investors.
Here’s why investors should consider buying AMZN stock now and why they’ll never regret it.
The Fundamentals
Amazon’s advertising division is a notable growth driver, with Q2 sales rising 22% year-over-year. Leveraging its robust AI capabilities and vast customer base, Amazon offers targeted ads, providing advertisers exceptional exposure and value for their spending.
Amazon’s profitability, currently around 3%, is often criticized for resembling retailers more than tech giants like Microsoft, which routinely achieves over 40% operating profit margins. Nevertheless, Amazon’s long-term strategy suggests margin improvement, especially from investments like AWS. The extensive delivery network investments have reduced delivery times, allowing room for future subscription price increases.
Amazon Embarking in Healthcare
Morgan Stanley (NYSE:MS) predicts AI will boost Amazon’s cloud services demand. Amazon plans to expand healthcare services through One Medical to address the US’s shortage of primary care providers, emphasizing affordable drug delivery as a central part of its healthcare strategy.
In 2018, Amazon entered healthcare with the PillPack acquisition. The company expanded its healthcare services with Amazon Clinic, a digital platform connecting employees to healthcare professionals. Signs of success include Blue Shield of California choosing Amazon’s pharmacy over CVS Caremark for its services.
Amazon and Generative AI
For AI market exposure, consider Amazon. While Microsoft (NASDAQ:MSFT) often takes the AI spotlight with its OpenAI investment, Amazon competes vigorously in AI innovation. Please don’t dismiss it over legal challenges.
Amazon is launching Amazon Bedrock, a fully managed generative AI service for businesses, offering a range of foundation models and AI capabilities. Their $4 billion investment in Anthropic, founded by former OpenAI executives, is another significant move in the AI industry.
Buy and Hold AMZN
Amazon’s immense size has drawn regulatory attention, potentially requiring adjustments, but it will likely endure scrutiny. Amazon’s leadership in AI and innovation shouldn’t be underestimated. AMZN stock remains a top tech market investment, and it’s advisable to hold rather than sell amid exaggerated legal concerns.
Strong cash flow enables the company to make bold investments that outpace rivals, promising improved earnings in 2023 and beyond. This recipe offers investors potential market-beating returns over the long term.
On the date of publication, Chris MacDonald has a LONG position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
