Amazon (NASDAQ:AMZN), once a bookseller, has evolved into a global e-commerce giant with a diverse product range. With a solid market share in key high-growth sectors, the company has remained remarkably resilient in growing through periods of volatility in the past. Year-to-date, AMZN stock is up roughly 70%, nearing its 52-week high of $149 per share. Investing in this tech giant remains attractive, considering its broad portfolio spanning streaming and cloud services and its core business.
Additionally, Amazon’s focus on Artificial Intelligence, demonstrated through investments in AI startup Anthropic, positions it well for future growth. Here are a few more reasons investors should consider this stock as a long-term hold in your portfolio.
Excellent E-Commerce Contender
E-commerce is fundamental to Amazon’s history. Originating as a bookstore, Amazon swiftly acquired other e-commerce ventures, establishing its dominance. The company now owns approximately 38% of the entire U.S. market and is also a venerable global player. Despite the pandemic-driven competition, Amazon maintains its lead, recently enhancing its fulfillment network under CEO Andy Jassy.
Facing reduced demand, Amazon prioritized efficiency without compromising quality or speed. AI investments played a key role, leading to a 20% decrease in package “touches” and a 19% reduction in travel miles per order in Q2 2023. This not only enhances customer satisfaction but also cuts travel costs. As e-commerce sales are projected to grow over 10% annually through 2028, Amazon’s dominance and commitment to improvement position it favorably within these trends.
Amazon Selling Hyundai Models
Amazon and Hyundai have teamed up to sell Hyundai vehicles online in the U.S. Customers can browse, customize, and purchase cars on Amazon.com, scheduling delivery through a local Hyundai dealer and expanding on their digital showroom partnership.
Hyundai established its initial digital showroom on Amazon in 2018 and announced an updated version at the Los Angeles Auto Show. The expanded agreement includes access to Amazon’s Alexa voice assistant in Hyundai vehicles by 2025. CEO Jay Chang expressed excitement about the partnership.
Cloud-Computing Services Are Top-Tier
AWS continues to dominate the cloud computing sector with a 32% market share. In Q3, AWS sales surged by 12% year-over-year, contributing significantly to Amazon’s operating income. While growth slowed due to customer budget cuts in the inflationary climate, management anticipates a reacceleration based on emerging trends.
Despite strong numbers in Q3, Jassy did note clients have been initiating cost optimizations. Thus, several significant deals signed in September will impact Q4 with a higher volume than Q3. Amazon introduced innovative generative AI services on AWS, aiming to enhance efficiency, reduce repetitive tasks, and encourage creative work, reinforcing its leadership, market share, and sales growth.
Bet on AMZN With No Doubt
In Q3 2023, sales surged 13% year-over-year, marking a return to robust profitability after an annual loss. With an operating margin of 7.8%, close to pandemic highs, Amazon’s diverse businesses, including advertising, streaming, and healthcare, present potential growth drivers.
Despite a price-earnings ratio of 75, reflecting a premium valuation, Amazon is known for reliable growth. Thus, as the company has done in the past, I expect AMZN stock to grow into this valuation over time easily. For those thinking long-term, AMZN stock remains a no-brainer in my book.
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.
