Amazon Stock Is a Buy No Matter How You Slice It

Stocks to buy

Amazon (NASDAQ:AMZN) stock is having a pretty good run. Its North American e-commerce business grew rapidly last quarter. Meanwhile, the operating income of both its North American e-commerce unit and its cloud business reached multi-year highs.

Driven by multiple, strong, positive catalysts, Amazon looks well positioned to expand in the coming quarters and years. In light of all of these points, I recommend that investors buy AMZN stock.

Solid E-Commerce Growth, Overall Profitability

Last quarter, the revenue of Amazon’s flagship North America e-commerce business jumped an 11% versus the same period a year earlier, while the unit’s operating income came in at $4.3 billion, much better than the operating loss of $400 million that it reported in Q3 of 2022.

The company’s cloud business, AWS, rose 12% year-over-year. While that increase was disappointing, its operating income increased a much more impressive 30% year-over-year.

The conglomerate’s overall operating income jumped an incredible 448% YOY to $11.2 billion, up from $7.7 billion in Q2. Clearly, the cost cutting prioritized by CEO Andy Jassy has lit a fire under the company’s profitability.

In fact, the firm’s operating income for North America and AWS units reached their highest levels since at least Q1 of 2021.

AMZN Stock Has a Bright Future

On Amazon’s Q3 earnings call, management reported that two of the company’s main AI offerings, Bedrock and CodeWhisperer, have received positive reviews from AWS’ customers.

One of these products is Bedrock, which enables companies to quickly and easily select which AI technology they want to use for each task. CodeWhisperer makes computer programming much easier for firms.

In light of management’s positive comments and the tremendous power of AI to reduce companies’ costs, I believe that the technology will be a powerful needle mover for AMZN stock in the not-too-distant future.

Also encouragingly, management noted that firms had recently become more willing to spend money on AWS.

I continue to believe that, over the longer term, Amazon can disrupt America’s huge pharmaceutical sector by reducing the retail costs of drugs. That’s because the firm can curtail overhead, such as retail stores and pharmacists, while cutting out middlemen, including pharmacy benefit managers.

Finally, I believe that AMZN will benefit from a string acceleration of its North American e-commerce business as Americans spend less on travel and more on goods.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

Articles You May Like

Dump These 3 Stocks Before Inflation Eats Into Profits
Wall Street Favorites: 3 Travel Stocks With Strong Buy Ratings for June 2024
BABA Stock Buy Alert: Why Alibaba Looks Compelling Here
3 AI Stocks to Sell in June Before They Crash & Burn
Stock splits are back in fashion. Here’s why, and which companies could be next