Amazon's E-Commerce and Cloud Business Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Should l Buy AMZN?
Source: NASDAQ.COM
- Sales and Profit Surge: Amazon reported a sales figure of $716 billion and a net income of $77 billion for the latest fiscal year, both reflecting double-digit growth, which underscores its robust performance in e-commerce and cloud computing, solidifying its market leadership.
- AI as a Revenue Driver: Amazon leverages AI through AWS to develop and offer AI products, with expectations that AI will become a new revenue growth driver, especially as customers prefer to consolidate workloads within the same system, positioning AWS to attract non-AI cloud customers.
- Chip Business Potential: Amazon's in-house designed Trainium chips have reached an annual revenue run rate of $20 billion, with potential external sales pushing this figure to $50 billion, indicating that its chip business could become a new revenue pillar while saving tens of billions in capital expenditures.
- Long-Term Investment Opportunity: Although Amazon's chip business will require time to develop, it is expected to accelerate revenue growth, suggesting that investors should consider buying Amazon stock at reasonable prices to capitalize on future gains.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 259.700
Low
175.00
Averages
280.01
High
325.00
Current: 259.700
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Unfavorable Guidance: The company's guidance for domestic same-store sales indicates a “low-single digit decline,” failing to instill confidence in investors and reflecting concerns about its growth potential, which may lead to further stock price volatility.
- Store Expansion Continues: Despite sales challenges, Wingstop is still increasing its store count and generating income and cash flow, suggesting a long-term optimistic outlook that could lay the groundwork for future recovery.
- Cautious Market Reaction: Investors are eagerly awaiting the upcoming earnings call, hoping management will provide more insights into the reasons behind the sales decline and the measures being taken to address it, in order to restore market confidence and stabilize the stock price.
See More
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See More
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- Increased Investment Commitment: Amazon's $50 billion investment in OpenAI, along with the provision of 2 gigawatts of Trainium chips for AI model training, not only enhances OpenAI's technological capabilities but also positions Amazon more favorably in the cloud computing market.
- Microsoft's Concessions: Microsoft has lost its exclusive license to OpenAI's intellectual property and ceased revenue share payments, indicating that Microsoft has made more concessions than gains in its relationship with OpenAI, which could affect its future profitability.
- Intensified Market Competition: As OpenAI deepens its collaboration with Amazon, the potential for further estrangement from Microsoft may increase, with analysts noting that while cooperation is still necessary, market competition is likely to intensify, potentially affecting each company's market share.
See More
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- Market Expectations: With high expectations for Amazon and Microsoft, despite Amazon's stock rising over 24% since the start of the year, the market remains cautious, suggesting that even a beat may not be sufficient for substantial stock price increases.
- Investor Confidence: Martin Roberge from Canaccord Genuity noted that the acceleration in digital ad spending and a 20% rise in GPU rental prices in Q1 will support these companies' earnings, and a strong showing could further validate the stock market's recent move to all-time highs.
See More
