Amazon's Stock Surges 24% Yet Remains a Strong Buy
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: Fool
- Strong Cloud Demand: Amazon Web Services (AWS) achieved a 28% year-over-year revenue growth in Q1, marking the fastest increase in 15 quarters, driven by the rapid rise of artificial intelligence, indicating robust cloud demand, with plans for $200 billion in capital expenditures in 2026 to meet customer needs.
- Wide Economic Moat: Amazon's significant scale and returns from earlier investments provide a cost advantage in both e-commerce and cloud computing, while network effects and switching costs further solidify its market position, leaving it virtually immune to disruption.
- Reasonable Valuation: Despite a 24% surge in Amazon's stock price over the past seven weeks, it trades at less than 19 times trailing operating cash flow, which is significantly lower than the trailing five- and ten-year averages, making current stock purchases appear quite prudent.
- Strong Operating Income: AWS generated $14.2 billion in operating income in Q1, accounting for 59% of the company's total revenue, underscoring its critical role in the overall business and bolstering investor confidence in Amazon's future growth.
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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: 266.320
Low
175.00
Averages
280.01
High
325.00
Current: 266.320
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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