The company pulled off an impressive recovery last year and has a stellar outlook.
Amazon (AMZN 3.43%) has come a long way since starting as an online book retailer out of Seattle nearly 30 years ago. The innovative company has expanded into multiple industries, from becoming a titan of e-commerce to leading the cloud market, developing space satellites, and venturing into grocery, gaming, consumer tech, and more.
Amazon's success has seen its financials flourish, with its annual revenue, operating income, and free cash flow soaring over the past five years. Meanwhile, its market capitalization hit $1.9 trillion in 2024, making it the world's sixth-most-valuable company and comparable to tech giants Alphabet, Nvidia, and Apple.
The company is on a promising growth path and seems nowhere near to hitting its ceiling as it continues to profit from the tailwinds of artificial intelligence (AI) and cloud computing. So, here's why Amazon's stock is a screaming buy right now.
See Also
Amazon stock forecast 2024, 2025, 2030, 2040, 2050Amazon (AMZN) Stock Forecast & Price Prediction 2025, 2030 | CoinCodexAmazon Stock Price | AMZN Stock Quote, News, and History | Markets InsiderAmazon Technical Analysis,Amazon daily Technical Rating,Indicators – RSI, MACD | MoneycontrolData by YCharts
It's one of the most reliable long-term holds
One of the best reasons to invest in Amazon is its proven reliability under strain. An economic downturn in 2022 caused a marketwide sell-off, resulting in the Nasdaq Composite plunging 33% during the year. Retailers were hit particularly hard as inflation spikes forced consumers to cut discretionary spending. Shares in Amazon fell 50% in 2022 alongside steep profit declines in its e-commerce segments.
However, the company has made an impressive recovery, proving its reliability and resilience. In fiscal 2023, Amazon's revenue rose 12% year over year to $575 billion, while operating income tripled to $37 billion.
A range of cost-cutting measures and easing inflation bolstered the company's e-commerce business, and its free cash flow has skyrocketed 904% to $32 billion in the last 12 months.
Amazon's performance over the last year highlights the importance of investing with a long-term mindset. Investors who sold the company's stock in 2022 will not have benefited from its significant growth since then.
Promising upside over the next two years
According to Statista, the e-commerce market is projected to hit $3.6 trillion this year and expand at a compound annual growth rate (CAGR) of 10% until at least 2028. Amazon's leading 38% market share in online retail therefore looks like the gift that will just keep on giving. The company's role in the industry is paramount, proven by Walmart's second-largest share of just 6%.
However, Amazon's biggest growth catalyst is easily its cloud platform, Amazon Web Services (AWS). In the fourth quarter of 2023, revenue from the platform rose 13% year over year to $24 billion. Meanwhile, AWS was responsible for 54% of the company's operating income, despite earning the lowest portion of revenue among its three segments.
AWS gives Amazon a lucrative role in AI, a market projected to develop at a CAGR of 37% until at least 2030. As the world's biggest cloud service provider, AWS has the potential to leverage its massive cloud data centers and steer the generative AI market.
So, it's unsurprising that the cloud company is investing heavily in the budding sector. In 2023, AWS responded to increased demand for AI services by introducing a variety of new tools. The platform launched Bedrock, a program that helps customers build generative AI applications. It also unveiled CodeWhisperer, capable of generating code for developers, and HealthScribe, a tool that can transcribe patient-to-physician conversations.
Meanwhile, Amazon is even using AI to boost its retail site and announced an AI shopping assistant dubbed Rufus ahead of its latest earnings release.
Data by YCharts
The tech giant is on a promising growth path, and earnings-per-share estimates seem to support its significant potential.The chart above indicates that Amazon's earnings could achieve nearly $7 per share by fiscal 2026. When multiplying that by its forward price-to-earnings ratio of 44, you get a stock price of $308.
This projection would see Amazon's stock rise 66% from its current value over the next two fiscal years. The company's shares are a screaming buy right now and worth considering before its share price surges.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Nvidia, and Walmart. The Motley Fool has a disclosure policy.
FAQs
Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
What will 1 share of Amazon stock be worth in 10 years? ›
Analysts at Coin Price Forecast do offer a 2034 projection for Amazon stock, estimating a 10-year price increase of 276%, to $672 per share.
Does Amazon stock have a future? ›
Wall Street analysts expect Amazon stock to keep gaining. Of the 63 Amazon stock analysts following the company, 95% hold a buy rating, according to FactSet. Further, FactSet data shows those analysts have, on average, set a 12-month price target of 212.45 for Amazon stock, according to FactSet.
What is the fair price of Amazon? ›
Fair Value Estimate for Amazon Stock
With its 3-star rating, we believe Amazon's stock is fairly valued compared with our long-term fair value estimate of $185 per share, which implies a 2024 enterprise value to sales multiple of 3 times and a 3% free cash flow yield.
Is Amazon stock Undervalued? ›
Amazon Stock is Still Very Undervalued and Shorting OTM Puts Makes Sense Here. Amazon Inc. (AMZN) reported strong free cash flow FCF margins last quarter. That implies that AMZN stock could be worth between 18% and 58% more.
What would $1000 invested in Amazon in 1997 be worth today? ›
If you had invested $1,000 during Amazon's IPO in May 1997, your investment would be worth $1,341,000 as of August 31, according to CNBC calculations. That's better than the so-called FAANG stocks, plus Ebay – which debuted in that same period.
What if you invested $10,000 in Amazon 10 years ago? ›
As a result, an investment of $10,000 a decade ago would be worth over $107,000 today. The company made many millionaires over the last decade, begging the question: Does it still have much to offer new investors? Let's examine Amazon's business more closely and determine whether it's still worth investing in in 2024.
Is Amazon a good stock to buy right now? ›
This projection would see Amazon's stock rise 66% from its current value over the next two fiscal years. The company's shares are a screaming buy right now and worth considering before its share price surges.
Is Amazon a hold forever stock? ›
Synergy Research Group reports Amazon's share of the cloud computing leads the way at 31% of the industry's worldwide revenue. Connect the dots. There's still plenty of room ahead for growth. The reason Amazon is a true forever name, however, are the evolutions it's going through right now.
Is Amazon a good long-term stock? ›
NASDAQ: AMZN
This e-commerce giant has good reasons to keep performing in the years to come. Amazon (AMZN 3.43%) has been a significant winner over the last two decades, generating enormous wealth for its investors.
When it comes to pricing, we do the work to compare and match Amazon's retail prices to competing physical and online competitors' stores to keep our prices low. Third-party sellers set their own prices—and Amazon offers optional tools to support them in offering competitive, low prices.
How much was a share of Amazon worth in 2003? ›
The closing price for Amazon (AMZN) in 2003 was $2.63, on December 31, 2003. It was up 174.2% for the year. The latest price is $179.62.
What is the highest price of Amazon? ›
Historical daily share price chart and data for Amazon since 1997 adjusted for splits and dividends. The latest closing stock price for Amazon as of April 25, 2024 is 173.67. The all-time high Amazon stock closing price was 189.05 on April 11, 2024.
Is Amazon a buy or sell today? ›
Amazon stock has received a consensus rating of buy. The average rating score is A1 and is based on 98 buy ratings, 2 hold ratings, and 0 sell ratings.
How much will Amazon stock go up in 2024? ›
Its Street-high target price of $230 implies an upside of 27.2% over the next 12 months. Analysts are overwhelmingly bullish on Amazon, and multiple brokerages listed it as a top pick for 2024. It has a consensus rating of “Strong Buy,” and is the highest-rated stock among the Magnificent 7.
Will Amazon stock go up in 2024? ›
Amazon (NASDAQ:AMZN) stock continues to perform well in 2024. Through its AI investments, shares are now priced at $180, up 20% on the year. Analysts are pricing in a consensus move toward $230 per share, which implies more than 27% upside from current levels.
How much would you have if you invested in Amazon 10 years ago? ›
As a result, an investment of $10,000 a decade ago would be worth over $107,000 today. The company made many millionaires over the last decade, begging the question: Does it still have much to offer new investors? Let's examine Amazon's business more closely and determine whether it's still worth investing in in 2024.
How much is $10,000 invested in Amazon 20 years ago? ›
Those gains translate to a 23.2% compound annual growth rate for Amazon compared to a 6.2% CAGR for the S&P 500 in that time. As a result, $10,000 in AMZN stock purchased 20 years ago would now be worth $645,262.
What will $10,000 be worth in 20 years? ›
The table below shows the present value (PV) of $10,000 in 20 years for interest rates from 2% to 30%. As you will see, the future value of $10,000 over 20 years can range from $14,859.47 to $1,900,496.38.
What will be Amazon share price in 2040? ›
Amazon price prediction key takeaways:
A more realistic projection, based on the historical yearly average of the S&P 500, suggests a price of $1,052 by 2040 and $3,023 by 2050 (which would be a +1,627% increase compared to current rates).
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