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Yahoo
an hour ago
- Business
- Yahoo
Amazon Stock: Buy, Hold or Sell?
Amazon delivered a solid performance in 2024. AWS and advertising will be the growth driver going forward. Amazon's stock trades at a reasonable valuation. 10 stocks we like better than Amazon › After touching a multi-year low of around $84 in early 2023, Amazon's (NASDAQ: AMZN) stock price has more than doubled to $200 (as of this writing), thanks to the improvement in financials. As the company moves forward on tailwinds such as artificial intelligence (AI) and facing headwinds such as the e-commerce slowdown, investors may wonder: Is now the time to buy, hold, or sell Amazon stock? Let's take a closer look. First, a review of Amazon's recent performance, focusing on its 2024 performance. Overall, it was a solid year for several reasons. Amazon expanded revenue by 11% to $638 billion, thanks to growth across all three major segments. North America was up by 10%, International was up by 9%, and Amazon Web Services (AWS) was up by 19%. While an 11% revenue growth rate is not unusually high, it is still remarkable considering the scale that Amazon operates in. Moreover, while its top-line growth was solid, the highlight of Amazon's performance in 2024 was the massive improvements in its bottom line. Operating profit jumped 86% from $36.9 billion to $68.6 billion, due to profit growth across all segments. The rapid margin expansion demonstrates the giant's strong execution capabilities in managing its costs and the benefits of operating leverage. Operationally, Amazon continued to improve delivery speeds, with more than 65% more items delivered to Prime members the same day or overnight than in the fourth quarter of 2023. It also launched Amazon Haul, a new ultra-low-price shopping service in the U.S., to compete against low-cost players like Temu and Shein. Similarly, in its cloud computing business (AWS), the tech company delivered good progress in 2024, such as introducing its new Trainium2 AI chip, establishing its foundation models in Amazon Nova, and creating new models and features in Amazon Bedrock that give customers flexibility and cost savings. All these innovations help position the company in the ongoing AI race. In other words, despite its size, the tech giant is still executing well to delight its users and maintain its share in key markets. Amazon might have become a household name thanks to the success of its e-commerce business, but the most significant growth drivers in the next few years will likely come from other segments. The biggest winner will likely be AWS, which rides on megatrends like AI advancement and the ongoing migration to the cloud. For instance, the global AI market is expected to grow from $294 billion in 2024 to $1.772 billion by 2032, a compound average growth rate of 29%. As the most significant cloud computing player globally with a 30% market share, AWS is primed to benefit from this once-in-a-generation trend. Another business gaining traction (which could accelerate further in the coming years) is Amazon's advertising business. Centered around Prime Video and Amazon Search, the advertising business generated $14 billion in revenue in the first quarter of 2025, up 18% year over year. This segment grew even faster than AWS (up 17% in the same quarter). Like AWS, advertising is a high-margin business, which will likely contribute to a margin expansion for the giant over time. Unlike the previous two businesses, the e-commerce segment could see a mixed performance in the coming years. On the positive end, Amazon can leverage its massive scale to gain market share from traditional brick-and-mortar shopping and expand in emerging markets like India. The downside is that it has to deal with the uncertainties of tariffs and emerging competitors like Temu and Shein. So, while Amazon is still favorably positioned to grow its e-commerce business, the e-commerce prospects will not be as straightforward as those of AWS and the advertising business. Still, while the prospects may differ for Amazon's various business segments, it is essential to highlight that the company has an unusual culture centered around its "Day 1" mentality. This mentality focuses on customer obsession, embracing new trends, willingness to experiment and fail, and avoiding bureaucracy. As long as the company can maintain this culture, it is well-positioned to continue growing in the years to come, albeit at a slower pace, given its already enormous size. Here's another factor that investors should consider before making a move in Amazon's stock: The stock valuation in relation to its past. Here, let's use price-to-sales (P/S) as a proxy. Amazon's P/S ratio has ranged from 1.7 to 4.6 times in the last five years. As of this writing, it is 3.3 times, just around the middle of that range. The current valuation suggests that while Amazon's stock is not a bargain today, it is not excessively priced compared to its past valuation. Amazon delivered strong results in 2024, highlighting the strength of its execution capabilities. Its high-margin segments -- AWS and advertising -- will drive future growth, supported by trends like AI adoption. While e-commerce faces mixed prospects, Amazon's Day 1 culture will likely keep it competitive for the foreseeable future. So, while the stock is not a screaming buy today, it is not a sell. Existing investors should hold on to the stock, while investors with a long-term horizon could consider buying a small position and adding to that position over time. Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 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. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy. Amazon Stock: Buy, Hold or Sell? was originally published by The Motley Fool
Globe and Mail
13 hours ago
- Business
- Globe and Mail
3 Things to Know About Amazon Stock Before You Buy
Everyone knows about Amazon (NASDAQ: AMZN). It's one of the most dominant, innovative, and disruptive enterprises that the world has ever seen. Today, it sports a monster market cap of $2.2 trillion, making it one of the most valuable companies out there. Amazon has done a fantastic job of rewarding its perennial investors. Shares are up 853% in the past decade and 11,290% in the past 20 years (as of May 28). Even after such an incredible performance, the " Magnificent Seven" stock might still be a worthy portfolio addition today, especially since it trades 15% off its peak. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Here are three things that investors need to know about Amazon before they buy. 1. The growth isn't over Between 2021 and 2024, Amazon's revenue increased by 36%. And according to Wall Street consensus analyst estimates, the top line will grow by 31% between 2024 and 2027. This is despite the business collecting a whopping $638 billion in sales last year. There is still meaningful growth potential. Amazon is well positioned to ride the wave of four potent secular trends. Of course, there's online shopping and the ongoing rise of e-commerce. But the company should also be able to continue leveraging its strong competitive positions in cloud computing with Amazon Web Services (AWS), digital advertising, and artificial intelligence (AI). Because Amazon's performance will be influenced by these tailwinds, I wouldn't be surprised if Wall Street's revenue forecast over the next three years proves conservative. 2. Multiple competitive advantages Warren Buffett is an investing legend who loves to own businesses that have an economic moat. This just means that a company possesses durable competitive advantages that make it difficult for rivals to effectively compete in an industry. Amazon stands out because it has multiple factors working to its benefit. For starters, the business has a powerful network effect, specifically with its marketplace. As more buyers go to the site to shop, sellers find the platform more valuable. In turn, this attracts more buyers because the product selection keeps expanding. Plus, the Prime membership option perpetuates this positive feedback loop, as Prime customers are sticky and might spend more. There's also a cost advantage that stems partly from Amazon's sprawling logistics footprint. Dense delivery routes keep shipping expenses low. And with its scale and sales base, the business also has buying power over suppliers. Switching cost is another important competitive advantage, this one for AWS. Enterprise customers depend on Amazon as an IT partner, which will become truer as adoption of AI tools grows. These customers won't want the hassle of changing providers. Investors can point to Amazon's wide economic moat as proof that this is an extremely high-quality company. There is minimal threat of disruption, which reduces risk. 3. Untapped earnings power Amazon has historically focused on growing the top line at a brisk pace. Shareholders bought into management's strategy because they knew the business was investing aggressively in new growth vectors. This has worked, as demonstrated by the company's huge scale. However, CEO Andy Jassy is figuring out ways to boost profitability, which is encouraging for investors. He wants to boost operational efficiencies and expense controls. As a result, operating income went from $24.9 billion in 2021 to $68.6 billion in 2024. While investors probably appreciate seeing profitability continue to improve, the best course of action for Amazon's long-term success is for the leadership team to properly invest in opportunities to grow the intrinsic value of the business over time. In other words, Amazon's true earnings power is still untapped. Should you invest $1,000 in Amazon right now? 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. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
Globe and Mail
2 days ago
- Business
- Globe and Mail
Beyond the Hype: 2 Top Under-the-Radar AI Stocks to Watch in 2025
As artificial intelligence (AI) continues to transform industries, a few blue-chip stocks like Amazon (AMZN), Nvidia (NVDA), and Microsoft (MSFT) dominate headlines. However, this does not always imply that they are the only viable investments in AI. Under-the-radar stocks, on the other hand, may be reasonably priced and have room for more expansion. Here are some lesser-known companies gaining traction in the AI space. #1: Arista Networks Valued at $116.5 billion, Arista Networks (ANET) is a leading provider of high-performance networking solutions for large data centers, cloud computing environments, campuses, and enterprise networks. The stock has experienced short-term volatility this year, primarily due to concerns about customer concentration, falling 21.4% year to date. Nonetheless, Arista's long-term outlook remains positive, with Wall Street expecting the stock to rise as much as 50% from current levels. As AI workloads require more from network infrastructures, Arista has strategically positioned itself to meet these demands. Ethernet-based solutions from the company are gaining popularity over traditional InfiniBand systems due to their scalability and cost-effectiveness. Arista began 2025 with a strong performance in Q1, reporting record-breaking revenues of $2 billion, up 27.6% annually. Adjusted net income increased 30% to $0.65 per share, exceeding consensus expectations. Management highlighted that adjusted gross margin went slightly above expectations to 64.1%, supported by an efficient supply chain and a healthy mix of enterprise and cloud customers. In the Q1 earnings call, CEO Jayshree Ullal emphasized Arista's growing presence in AI and cloud networking. The company expressed confidence in meeting its $750 million AI front-end goal by 2025. Arista aims to be the leading scale-out network provider for Nvidia's evolving GPU (graphics processing units) and AI accelerator roadmap, with its Etherlink portfolio serving as a key differentiator in large AI cluster performance. The company ended the quarter with a total of $8.15 billion in cash, equivalents, and marketable securities. During the quarter, it spent $787.1 million on stock repurchases, its largest repurchase to date. It also announced a new $1.5 billion stock buyback authorization, boosting investor confidence in long-term growth. Even with ongoing macroeconomic volatility and tariff uncertainty, Arista remains optimistic. With growing opportunities in AI, cloud, and campus infrastructure, the company is confident of meeting and possibly exceeding the $10 billion revenue milestone ahead of schedule. Analysts who cover the stock remain optimistic about the company's future. Revenue and earnings are expected to rise by 19.6% and 12.4%, respectively, in 2025, with further double-digit growth in 2026. Arista stock appears to be expensive, trading at 31 times forward earnings, but this reflects investors' confidence in the company's long-term growth prospects. The company's strategic investments in AI networking, combined with its strong financial health, position it well to capitalize on new opportunities. On Wall Street, Arista stock holds an overall rating of ' Moderate Buy.' Of the 22 analysts covering the stock, 14 rate it as a "Strong Buy," two as a "Moderate Buy," and six recommend a 'Hold.' The stock's average target price of $111.68 suggests a potential upside of 27% from current levels, while the highest price estimate of $130 indicates a possible 50% rally over the next 12 months. #2: Vertiv Holdings Valued at $41.6 billion, Vertiv Holdings (VRT) specializes in designing, manufacturing, and servicing infrastructure technologies for data centers, communication networks, and commercial and industrial environments. Its product portfolio comprises power management systems, thermal management solutions, and IT management tools. Vertiv's stock is down 4.4% year-to-date. The surge in AI applications has increased the demand for high-density data centers. Vertiv is capitalizing on this trend by offering advanced cooling and power solutions specifically designed for AI workloads. The company posted a strong first quarter of 2025. Vertiv reported a 49% increase in earnings to $0.64 per share, exceeding expectations by $0.04, thanks to 25% organic net sales growth and a record book-to-bill ratio of 1.4x. In the Q1 earnings call, CEO Giordano Albertazzi stated that the company's visibility into the data center market, particularly AI infrastructure, gives management confidence not only for 2025, but also for the long term. Vertiv ended the quarter with nearly $1.5 billion in cash and cash equivalents and $265 million in adjusted free cash flow. Management stated that Vertiv has spent the last two years developing a resilient, geopolitically diverse supply chain. The company operates with strong local capacity in the U.S. and Mexico and has begun relocating production away from high-tariff regions. Vertiv raised its 2025 sales growth guidance to 18%, citing strong demand signals from AI and hyperscale customers. The midpoint EPS guidance of $3.55 remains unchanged, implying 25% year-over-year growth, despite the company expecting a $50 million headwind from U.S.-China tariff impacts in the second quarter. Analysts predict revenue growth in the same range, with earnings rising by 25% by 2025. Currently, Vertiv stock is trading at 30 times forward earnings. While the global tariff environment is complex, the company's proactive supply chain strategy and solid financial position it for continued success in 2025 and beyond. On Wall Street, Vertiv stock holds an overall rating of ' Strong Buy.' Of the 19 analysts covering the stock, 15 rate it as a "Strong Buy," one as a "Moderate Buy," and three recommend a 'Hold.' The stock's average target price of $119.50 suggests a potential upside of 9.1% from current levels, while the highest price estimate of $150 indicates a possible 37% rally over the next 12 months.
Business Insider
2 days ago
- Business
- Business Insider
Amazon (AMZN) Looks to Invent Brand-New Consumer Products with Its New ZeroOne Team
E-commerce giant Amazon (AMZN) has created a new team called ZeroOne within its devices division. This group is focused on inventing brand-new consumer products and is led by J Allard, a former Microsoft executive who helped create the Xbox and Zune. The team is based in Seattle, San Francisco, and Sunnyvale, and works on both hardware and software projects. The name 'ZeroOne' comes from its goal of taking ideas from nothing (zero) to launch (one). Confident Investing Starts Here: Amazon has had a mix of successful and failed products over the years. While it found success with devices like the Kindle, Echo, and Fire TV Stick, it also had flops such as the Fire Phone and the Halo fitness tracker. Many of these products were developed by Amazon's hardware team, Lab126. However, ZeroOne is seen as a new push for innovation. Interestingly, Job postings are hinting at smart-home products that use computer vision, and say that the team values design thinking, rapid testing, and building new product categories. The group includes staff with experience from Alexa, Luna gaming, and the Halo sleep tracker, and is led in part by the founder of Lightform, a startup Amazon bought. However, while Amazon grows the ZeroOne team, it has cut jobs in other parts of its devices and services division. In fact, it recently laid off about 100 employees, including people working on Alexa, Amazon Kids, and at Lab126. Over 50 of these layoffs happened at the Sunnyvale facility, according to California records. Nevertheless, it is worth noting that Amazon said the cuts only affected a small percentage of the division, which has tens of thousands of workers. Is Amazon Stock Expected to Rise? Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 47 Buys and one Hold assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $240.62 per share implies 17.4% upside potential.
Yahoo
3 days ago
- Business
- Yahoo
‘Time to Stock Up,' Says Bill Ackman After Pulling the Trigger on Amazon Stock (AMZN)
Bill Ackman is making waves again—his Pershing Square Capital Management just made a bold bet on Amazon (AMZN), snapping up nearly $1 billion in stock during Q1 2025. The blockbuster move comes at a time when Amazon is under pressure from tariffs, slowing AWS growth, and fierce AI competition—issues that have dragged the stock down year-to-date. Ackman's aggressive play has reignited debate on whether now is the moment to buy into Big Tech's most embattled giant. Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Despite macroeconomic headwinds and competition, Ackman sees a resilient AWS, underestimated retail strength gains, and temporary market overreactions as compelling reasons to 'stock up' on AMZN, and I happen to agree. Amazon Web Services (AWS) saw its growth accelerate in the first quarter of 2025, posting $25 billion in revenue, a 17% year-over-year increase. Profitability surged as well, with operating income nearly doubling from $5.1 billion in Q1 2024 to $9.4 billion. As AWS scales, it continues to benefit from powerful tailwinds in the cloud computing industry, which is projected to grow at a 20.4% CAGR and surpass $1 trillion in the coming years. Competing with giants like Microsoft Azure and Google Cloud Platform (GCP), AWS is doubling down on AI to fuel further demand. Amazon's heavy investment in generative AI, through initiatives like its Bedrock platform and custom-built chips such as Trainium, is positioning AWS as a leader in this next phase of cloud innovation. Now accounting for roughly 17% of Amazon's total net sales, AWS has become a growth engine so significant that it could stand alone as a major tech company. Amazon's core retail segment continues to demonstrate strong momentum, with domestic revenue rising 12% year-over-year to $86.3 billion. International markets also contributed positively to the segment's growth. Importantly, Amazon has transformed this historically lower-margin business into a significantly more profitable one, reporting $5 billion in operating income for the quarter—a notable achievement given the inherent challenges of retail operations. This profitability reflects years of strategic investment in its fulfillment infrastructure, which has been refined to deliver faster shipping and reduce transportation costs. Despite persistent macroeconomic pressures and evolving consumer behavior, Amazon's first-quarter retail performance underscores the resilience of both its business model and customer demand. While the retail segment faces increased competition from players like Walmart and Temu, Amazon continues to lead the U.S. e-commerce market with a commanding 37.6% share, well ahead of Walmart's 6.4% in second place. Additionally, Amazon's advertising business—largely integrated within its retail ecosystem—is growing at an impressive 24% year-over-year and remains a key driver of overall profitability. Given Amazon's strong positioning across retail, cloud computing, and AI, it's easy to see why investors like Bill Ackman have taken an interest. The company offers exposure to a diversified array of high-growth sectors. Notably, Amazon's valuation appears reasonable by historical standards, with a current price-to-earnings ratio of 32.8, compared to its typical range of 40 to 80 in recent years. On Wall Street, Amazon has a Strong Buy consensus rating based on 47 Buy, one Hold, and zero Sell ratings in the past three months. AMZN's average price target of $240.62 implies almost 17% upside potential in the next twelve months. DBS analyst Nashrullah Putra Sulaeman has a Buy rating on AMZN. He noted that Amazon's performance, particularly in its cloud segment, was impressive despite a decline in free cash flow due to increased capital expenditure. He also pointed out that 'Amazon's retail segment is on a recovery path, showing sustained profitability and improved operating margins.' Likewise, analyst Brent Thill of Jefferies maintains a Buy rating on AMZN with a price target of $240. He noted that a 6% acceleration in AWS backlog 'indicates a strong demand for AWS services, coupled with record operating margins of 39.5%, showcasing Amazon's ability to manage capacity constraints effectively.' Despite tariffs threatening its retail segment, the analyst believes the retail giant is better suited to handle macroeconomic headwinds than its competitors. In summary, Amazon continues to demonstrate strong performance across its key business segments. Its leadership in e-commerce provides a buffer against broader economic challenges, while accelerating growth in AWS underscores the company's successful diversification into high-margin, scalable markets. Strategic investments in AI further enhance its competitive positioning and open doors to new verticals. That said, investors should remain mindful of the risks. Cloud computing, digital advertising, and e-commerce are all intensely competitive industries, and Amazon's future success will hinge on its ability to maintain leadership in AWS while driving greater efficiency and sustainable profitability in its retail operations. Despite its operational momentum, Amazon's stock has lagged this year—an underperformance that has drawn attention from high-profile investors like Bill Ackman. With strong institutional support, reflected in Wall Street's 'Strong Buy' consensus rating, and exposure to several high-growth sectors, Amazon remains a compelling long-term opportunity for investors. Disclaimer & DisclosureReport an Issue Sign in to access your portfolio
