Among the “Magnificent Seven” stocks, Amazon (AMZN) stands out as one of the quieter players. Despite its widespread brand recognition, Amazon stock tends to make fewer headlines compared to its peers. This is actually a positive sign, as it indicates that Amazon is steadily progressing in expanding its e-commerce, cloud computing, and other businesses.
In its latest earnings release on April 30, Amazon reported strong results for the fiscal quarter ending March 31, 2024. The company exceeded expectations for both revenue and earnings, with a 13% year-over-year revenue increase to $143.3 billion. Amazon’s AWS cloud computing segment experienced even higher growth at 17%.
The integration of generative artificial intelligence features into AWS is driving this growth, along with strong performance in Amazon’s domestic e-commerce and digital advertising segments. Net income more-than-tripled, reflecting the company’s overall positive momentum.
In addition to its solid financial results, Amazon announced plans to ramp up capital spending to meet the increasing demand for cloud-based AI services. As a result, Amazon stock has been trending higher since the earnings release, reaching near-record highs.
While the stock may seem pricey at around 41.5 times forward earnings, Amazon’s exposure to the AI growth trend positions it well for long-term success. With forecasts predicting earnings growth of around 44% this year and nearly 30% in 2025 and 2026, Amazon has the potential for significant bottom-line growth.
Considering the company’s strong revenue and earnings potential, Amazon remains a compelling long-term buy and hold investment opportunity. As the company continues to optimize costs and raise margins in its e-commerce and cloud computing segments, there is plenty of room for further growth and profitability.
In conclusion, Amazon’s steady performance and strong growth prospects make it a promising investment choice for investors looking for sustained returns over the coming years.