Headlines about the Amazon (NASDAQ:AMZN) stock outlook this week blare the news about founder and executive chairman Jeff Bezos selling over $4 billion worth of stock.
Just as AMZN stock is nearing new all-time highs, some investors might worry this is a signal to sell. It’s not chump change Bezos is receiving so if he’s selling maybe you should sell too.
That would be a mistake. Investing legend Peter Lynch once noted that executives can sell for any number of reasons but they typically buy them only because they think the stock is going up.
That means you should ignore the noise surrounding stock sales. Bezos could be engaged in estate planning, need a new jacuzzi installed at his home, or dozens of other reasons that have nothing to do with Amazon’s business.
Although Bezos sold nearly 12 million shares he still owns more than 964 million shares. Despite the dollar amount realized this is a non-event. Amazon’s founder continues to have a significant stake in the company.
That’s just one reason an AMZN stock outlook suggests you might want to own it too. Here are a few more.
AMZN Stock Outlook
Despite the rise of e-commerce competitors looking to undercut Amazon’s dominance, the online retailer remains the biggest in the business.
Over $105 billion in sales were generated in North America in the fourth quarter. Another $40 billion came in from overseas. There was a time not so long ago that was what Amazon made in a whole year.
Although there is talk about Amazon sales slowing, Q4 still showed 13% gains. That’s not bad for a $1.8 trillion business. AMZN and similar companies move in sweeping curves, not zig zags. Amazon made more than $484 billion in profitable retail sales last year. That’s a successful business regardless.
Running the Internet
Yet Amazon cloud business Amazon Web Services remains the critical profit center of the company. Sales also rose 13% to $24 billion in Q4 and to over $90.7 billion for the full year.
Yes, that is down from the 40% growth it enjoyed at the end of 2021 but like other cloud providers Amazon looking to artificial intelligence to energize new expansion opportunities.
AWS made a suite of AI tools available for enterprise customers to innovate and improve their products. They can use the tools to improve their own applications. For example, Amazon Recognition makes it easy for users to add image analysis to their apps. Amazon Polly can turn text into lifelike speech.
Amazon also optimizes AI in its warehouses to predict demand, track the supply chain, and evaluate delivery routes.
An Advertising Juggernaut
Amazon was already a digital ad behemoth. It ranked third behind Alphabet‘s (NASDAQ:GOOG)(NASDAQ:GOOGL) Google and Meta Platforms (NASDAQ:META). Amazon had $14.7 billion in ad sales in Q4, up 27% year over year. That was the largest increase by any of the major players.
Now it just turned on advertising on its Prime Video service, which instantly makes it the largest ad-supported streaming service. In the U.S. alone Amazon has an estimated 168 million Prime subscribers.
No one subscribes to Prime for streaming movies but it is a nice added bonus. Now if members want to avoid ads they will have to pay an extra $3 a month. It’s doubtful very many will do so.
That makes Prime Video an instant desirable destination for advertisers that will incrementally boost revenue. Amazon probably annoyed a lot of subscribers by doing so but it runs ads on Amazon Music unless you subscribe to the premium version.
This is a similar move but one that will generate more revenue. It just adds to the reason why you want to own AMZN stock.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
