Amazon Wants to Create ‘Breakthrough' Products. Should You Buy AMZN Stock Here?
Over the past decade, consumer electronics divisions at major tech firms have driven growth, with hits like Apple's (AAPL) AirPods fueling shareholder gains while flops left others scrambling.
Following in those footsteps, Amazon (AMZN) is stepping up its game by forming a new group called ZeroOne. The team's mission is to take ideas from 'zero to one' and launch entirely new product categories. ZeroOne is led by J Allard, the former Microsoft (MSFT) veteran who co-created the Xbox console. Job listings hint at projects ranging from smart-home computer vision to AI-powered wearables.
This push comes after Amazon's mixed track record in devices. While the Kindle and Echo were major successes, products like the Fire Phone and Halo fitness tracker failed to gain traction. Recruiting Allard signals a bold bet on breakthrough innovation to reinvigorate the company's hardware ambitions.
Amazon's top-line momentum is being fueled by its high-margin advertising arm, and the launch of ZeroOne offers potential new catalysts if it yields breakout products.
About Amazon Stock
Based in Seattle, Amazon is a global e-commerce leader, offering everything from everyday essentials to fresh groceries through its vast online marketplace and Prime subscription services. Its Amazon Web Services (AWS) division powers businesses worldwide with scalable cloud computing, storage, and AI tools. Beyond retail and cloud, Amazon generates high-margin revenue from its advertising platform and digital content, streaming video, music, and ebooks. The company is also expanding in logistics, robotics, and emerging technologies to drive efficiency and support future growth.
Valued at approximately $2.2 trillion, Amazon shares have rallied 12% over the past 52 weeks, yet are down nearly 7% year-to-date amid fears over tariffs. Despite underperforming this year, Amazon shares still trade at a premium multiple of 33x forward earnings, significantly higher than the industry average of 16x. However, these multiples are well below its own historical average of 70x.
AI-Powered Cloud Services
Artificial intelligence is playing a key role in driving AWS's expansion. Amazon clients leverage tools like SageMaker to train and run models on Amazon's servers instead of purchasing costly hardware. As the global cloud computing market leaps from $750 billion in 2024 to nearly $2.9 trillion by 2030, AWS stands to capitalize on a projected 20% expansion driven by AI demand.
Furthermore, AI is transforming Amazon's operations. The company deploys machine learning to optimize warehouse robotics, cut labor costs and speed order fulfillment. It enhances product recommendations, refines Alexa's voice responses, and improves demand forecasting. These AI applications boost efficiency, customer satisfaction and profitability across Amazon's vast e-commerce and services ecosystem.
Amazon Delivered Strong Q1 Earnings
Amazon's recent earnings beat, helped by temporarily easing tariff pressures, has lifted investor sentiment. On May 1, the e-commerce giant reported Q1 revenue of $155.7 billion, up 9% year-over-year and $546 million above guidance.
Despite Online Stores being Amazon's largest segment, it grew just 5% to $57.4 billion and carries razor-thin margins. Nevertheless, companywide operating income jumped 20%, underscoring how its cloud and ad businesses are increasingly shouldering the profit load.
Logistics efficiencies also played a key role. Shipping costs rose only 3% year-over-year against an 8% increase in paid units, a notable five-point gap compared to last year. Internal documents point to warehouse robotics flattening Amazon's hiring curve, further trimming labor expenses.
Meanwhile, AWS once again led the way, posting 17% revenue growth on a $120 billion annual run rate and expanding operating margins to 39%. These results highlight AWS's role as the company's primary profit engine.
On an adjusted basis, Amazon reported earnings of $1.59 per share, surpassing estimates by $0.24.
Looking ahead, management sees up to 11% year-over-year revenue growth in Q2. While tariff jitters could temper top-line upside, the 11.8% operating margin achieved in Q1 suggests Amazon is well-positioned to exceed profitability expectations once again.
What Do Analysts Think About Amazon Stock?
Analysts remain bullish on Amazon after its Q1 earnings. Wedbush raised its price target from $225 to $235 early in May, citing 'multiple levers of sustainable margin improvement.'
Similarly, JPMorgan boosted its price target from $220 to $225, noting that AWS is bringing on more capacity and that incremental supply is being consumed quickly.
Overall, Amazon carries a consensus 'Strong Buy' rating from Wall Street analysts, with a mean price target of $240.69 implying 17% upside from current levels.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
37 minutes ago
- Globe and Mail
These 3 Passive-Income ETFs Are a Retiree's Best Friend
Most people don't want to spend much time managing their retirement portfolio once they've stopped working. After all, you've made it! This is the period in your life when it's time to relax. It is essential to know the tools available to help you build a diversified nest egg that will meet your needs without having to watch it 24/7. That's where exchange-traded funds (ETFs) can help. These are buckets of stocks that trade under one ticker symbol. An ETF might follow an index or a particular investment strategy. The great thing is that a small handful of ETFs can create a well-diversified portfolio that will help protect you from risk. Here are three ETFs that could be a retiree's best friend. They are different from one another, but all three offer retirees the passive income they need. 1. Vanguard International High Dividend Yield ETF America is home to many of the world's most prominent companies, which is why the U.S. stock market is more valuable than any other countries' by a wide margin. However, there are still remarkable companies outside the United States that can help your portfolio. The Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) is a great way to add that international investment exposure without having to wade through data that could be in different currencies or languages. It's the perfect situation for an ETF. It carries a 0.22% expense ratio, which Vanguard claims is far lower than comparable funds. VYMI Dividend Yield data by YCharts The ETF holds nearly 1,500 stocks, primarily companies based in North America, Europe, the Pacific region, and emerging markets. Its holdings span virtually all industries and includes top holdings like Nestle, Novartis, Roche, and Shell. The ETF's current yield is approximately 4.6%. Since its inception in 2016, the ETF has generated annualized total returns averaging 8.3%. Consider the Vanguard International High Dividend Yield ETF a great ETF for investing in fantastic companies that probably wouldn't be on your radar otherwise. 2. Invesco High Yield Equity Dividend Achievers ETF The passive income doesn't stop there. The Invesco High Yield Equity Dividend Achievers ETF (NASDAQ: PEY) tracks an index of 51 stocks on the Nasdaq stock exchange with high yields and a history of dividend growth. Financial and utility stocks comprise roughly half the ETF, which lists Walgreens Boots Alliance, Altria, Franklin Resources, Verizon Communications, and UGI among its largest holdings. No stock represents more than 4% of the ETF, so it's well-diversified despite holding just 51 stocks. PEY Dividend Yield data by YCharts This ETF's expense ratio is 0.53%, a little higher than I generally like. However, it has averaged a 9.5% annualized return (pre-tax) over the past decade, giving investors solid total returns while meeting their passive income needs. Invesco High Yield Equity Dividend Achievers ETF currently yields 4.6%. The fund's market price has climbed amid the Federal Reserve's interest rate cuts, which underlines how attractive these reliable high-yield ETFs can be to investors in a lower-rate investing climate. 3. Invesco S&P 500 High Dividend Low Volatility ETF Peace of mind is increasingly important as you age, which attracted me to the Invesco S&P 500 High Dividend Low Volatility ETF (NYSEMKT: SPHD). This ETF holds 52 companies listed on the S&P 500 index with high dividend yields and low betas. Stocks with high dividend yields can be more volatile because high yields can signal underlying trouble in a company. However, these low-beta stocks are the exception to this common wisdom. They generally stay more grounded and don't go up or down as sharply as the broader market. SPHD Dividend Yield data by YCharts Its top holdings include Bristol Myers Squibb, Altria, Kinder Morgan, AT&T, and Dominion Energy. Once again, the ETF holds a modest number of stocks (52), but the largest weighting is just over 3%. It's all spread pretty evenly, which means the ETF is well-diversified. The fund's yield is just 3.4%, following strong performance over the past 12 months. The ETF's annualized total returns have averaged 10% for the past decade, a pretty good deal considering the expense ratio is just 0.30%. Those looking for an ETF of mature blue chip dividend stocks should take a good look here. Should you invest $1,000 in Vanguard International High Dividend Yield ETF right now? Before you buy stock in Vanguard International High Dividend Yield ETF, 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 Vanguard International High Dividend Yield ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. See the 10 stocks » *Stock Advisor returns as of November 11, 2024 Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Kinder Morgan. The Motley Fool recommends Dominion Energy, Nestlé, Roche Holding AG, and Verizon Communications. The Motley Fool has a disclosure policy.
Globe and Mail
41 minutes ago
- Globe and Mail
UnitedHealth (UNH) CEO Hemsley Vows Cost Controls as Q1 Earnings Fall Short
UnitedHealth's (UNH) new CEO, Steve Hemsley, opened his tenure by apologizing for the company's first earnings miss since 2008, pledging to restore shareholder confidence and address rising care costs. Hemsley replaced Andrew Witty after the first-quarter shortfall, which was driven by unexpectedly high costs in the Medicare Advantage unit, prompting a suspension of the 2025 guidance as UnitedHealth recalibrated its financial outlook. Market Overview: UnitedHealth missed first-quarter earnings estimates for the first time since 2008 Medicare Advantage costs rose above forecast, leading to suspension of 2025 guidance Optum Rx pharmacy benefit manager and UnitedHealthcare insurer units faced higher-than-expected care costs Key Points: Hemsley committed to incorporating elevated care-cost assumptions into future pricing Company will review forecasting models and risk metrics across all business units Optum Rx and UnitedHealthcare divisions to undergo a comprehensive audit of practices Looking Ahead: Investors will watch for more accurate guidance tied to real medical-cost trends Execution of cost-control measures and transparent reporting will be critical to restoring confidence Containment of Medicare Advantage losses will determine near-term profitability and trust Bull Case: The return of Stephen Hemsley as CEO brings experienced leadership to UnitedHealth. Hemsley previously led the company from 2006 to 2017 and has a deep understanding of its operations. He has pledged to earn back shareholder trust and optimize quality in its health services. Hemsley has initiated a comprehensive review of all company policies, practices, and performance measures, including controversial areas like Medicare Advantage risk adjustment and pharmacy benefits management. This review will involve independent experts, and approaches will be modified where appropriate. The company plans to factor in higher care costs into its private insurance plans and next year's Medicare Advantage plans, which could help stabilize margins in the future. Despite recent setbacks, UnitedHealth has a history of resilience and delivering long-term value to shareholders, as evidenced by a total shareholder return of nearly 16% over the past five years. Hemsley expressed optimism about the company's future, stating that many of the issues are within UnitedHealth's control and capacity to resolve. Bear Case: UnitedHealth reported its first earnings miss since 2008 in the first quarter, driven by unexpectedly high medical costs in its Medicare Advantage unit, leading to a suspension of its 2025 financial outlook. The company's shares plummeted significantly following the earnings miss and guidance withdrawal, reflecting a sharp decline in investor confidence. Shares fell nearly 20% in pre-market trading after the initial Q1 earnings report and later hit their lowest closing price since October 2020. Rising care utilization, particularly in Medicare Advantage where physician and outpatient care activity was described as "twice the rate we anticipated," is a major challenge, straining medical costs and profitability. The Optum Health division faced reimbursement gaps due to members transitioning from exited plans who required costlier care than expected. The abrupt departure of former CEO Andrew Witty and the suspension of guidance less than a month after a previous downgrade indicate significant internal challenges and uncertainty regarding the company's financial trajectory. UnitedHealth faces reputational challenges and scrutiny over various practices, which new CEO Hemsley has acknowledged and pledged to review. Hemsley emphasized that future financial guidance would explicitly reflect rising care costs and that all segments must improve forecasting accuracy to rebuild trust. Analysts noted that UnitedHealth must demonstrate tangible progress in cost containment and deliver consistent, reliable forecasts to stabilize its stock and regain investor confidence.
Global News
an hour ago
- Global News
Canadian brand spotlight: Get to know Veradek
The Curator independently decides what topics and products we feature. When you purchase an item through our links, we may earn a commission. Promotions and products are subject to availability and retailer terms. In this week's Canadian brand spotlight series, we're diving into the world of Veradek – a homegrown brand redefining modern outdoor living with its sleek, architectural planters and outdoor décor. Based in Toronto, Veradek has become a go-to name for design-forward homeowners and landscapers alike, known for its clean lines, durable materials, and distinctly contemporary aesthetic. Founded with a vision to bring form and function together, Veradek specializes in high-quality outdoor products that blend urban sophistication with everyday usability. From minimalist steel planters to modular privacy screens, each piece is designed to elevate outdoor spaces – whether it's a downtown balcony or a sprawling backyard garden. What sets Veradek apart is its commitment to both design integrity and local craftsmanship. Proudly made in Canada, the brand prioritizes sustainability through recycled materials and weather-resistant finishes built to last season after season. Story continues below advertisement Veradek's products have been featured in design publications and embraced by architects, interior designers, and green thumbs across North America. For those who believe that outdoor spaces deserve just as much style and intention as interiors, Veradek delivers a bold, durable, and unmistakably modern answer. Demi Chill Side Table Keep things chill and stylish with the cooler side table – perfect for dads and moms who love to entertain, keeping up to 48 cans cold for 12 hours in a sleek, modern design. Made in Canada from real stone-plastic composite, it's tough enough for any weather and cute enough for any patio. $134.99 on Amazon $129.99 at Veradek Brixton Window Box Planter Yes, it may channel classic estate charm, but the Brixton Planter is built for today – with recycled, all-weather plastic that resists scratches, cracks, and UV damage. Designed in Canada to handle everything from deep freezes to heat waves, it's a timeless piece that's tougher than it looks. $169.99 on Amazon $99.99 at Veradek Story continues below advertisement Brixton Tray Table Don't compromise on aesthetic with this storage-friendly option. This sleek tray table is a backyard essential for organized patio hosting, perfect for tucking away cozy outdoor blankets and pillows. $99.99 on Amazon $99.99 at Veradek Demi Long Planter This planter has a soft, textured finish that looks just as good as it performs. It's designed to handle everything from freezing winters to scorching summers – no fading or scratches. $129.99 on Amazon You may also like: Rolling Grill Basket(2PCS) – $29.99 Grill Caddy – $49.99 Story continues below advertisement 34Pcs BBQ Grill Accessories – $49.99 Outdoor Kitchen Counter Long Cooking outdoors just got a whole lot sweeter with plenty of counter space so you can prep, cook, and serve without missing a single moment of the fun. $439.99 at Veradek Mason Series Raised Lima Planter This goes for all planters – durability matters. Also, never skip the stand. Elevating your plants helps them breathe – and it looks way better, we promise. $119.99 on Amazon Geo Trough Planter Your plants will look as sleek as ever in the Veradek Geo Trough Planter. This piece stands out with its sharp geometric design and lightweight, UV-resistant composite. $44.99 at Veradek Story continues below advertisement Demi Shade Side Table The Demi Shade Side Table turns up the outdoor glam with sculpted flutes and a luxe real-stone finish – a far cry from your clunky old umbrella stand. $144.99 at Veradek You may also like: 76×51 inches Large Grill Mat for Outdoor Grill – $46.99 BFOUR Wireless Meat Thermometer – $89.99 2 Packs BBQ Grill Brush – $20.39
