3 reasons to buy Amazon stock like there’s no tomorrow

After the stock price plummeted in 2022, Amazon (AMZN -0.36%)Like many big tech companies, the company had a remarkable year of recovery in 2023. And he sees that going into 2024, investors will be very optimistic.

Economic conditions are likely to be stronger this year, which could lead to improved performance. and, federal reserve Expected interest rate cuts could further increase investor enthusiasm.

In addition to these points, here are three compelling reasons to buy Amazon stock like there’s no tomorrow.

1. Multiple growth drivers

I think the main reason Amazon is such a great investment is because it benefits from a number of growth drivers. Of course, most investors are well aware of the company’s advantages. e-commerce. Amazon has gone from just selling books online to selling just about everything. And today, 38% of all online spending in the US is online.

This lead means Amazon can continue to capture a large portion of the growth in the e-commerce space. E-commerce accounts for less than 16% of retail spending in the U.S., so we still have a long way to go.

The company’s cloud arm, Amazon Web Services (AWS), which controls about a third of the global market, is also very important. AWS will continue to benefit as companies move spending off-premises thanks to cost savings and flexibility. Grand View Research believes that cloud industry revenue will reach $1.6 trillion by 2030, and AWS is well positioned.

back only alphabet‘s YouTube and NetflixAmazon Prime Video is the third most popular streaming service in terms of TV hours watched in the United States. As this form of entertainment continues to grow in popularity compared to traditional cable TV, Amazon has an advantageous tool to drive subscription revenue.

Then there’s digital advertising, a hot area fueled by the popularity of online marketplaces. Amazon.com had 4.7 billion visitors in November, so it’s a smart place to advertise. The division generated his $12.1 billion in revenue in the third quarter of 2023, an increase of 25% year over year.

2. Protecting the economic moat

Buying Amazon stock is also a great idea. economic moat. This element helps strengthen Amazon’s competitiveness and protects it from potential disruptions.

First of all, the company’s scale is unparalleled. By operating a huge distribution base, Amazon is able to ship products at low costs. And this helps improve the customer experience.

Online marketplaces offer powerful benefits. network effect. These 4.7 billion visitors attract sellers looking to sell to a large customer base. And with more sellers on the platform, the selection of products you can shop for is vast. Therefore, the larger the market, the more valuable it becomes.

Amazon’s data advantages can’t be ignored either. In the digital age, this becomes even more important. E-commerce operations can glean insights from all the data collected about shopper behavior and use it to improve site functionality.

And thanks to its dominance in the cloud industry, AWS is able to amass more data from its clients than its competitors, which can be directed toward a variety of initiatives, especially when: artificial intelligence (AI).

3. Transactions at fair prices

In addition to the economic moat that comes from multiple growth engines and many sources, investors should buy Amazon stock like there’s no tomorrow because of the reasonable valuation. The company’s stock price soared 81% in 2023, Nasdaq Compositegained 43%. However, the stock is still about 20% below its peak price, with the stock trading at an all-time high. Price relative to sales It is currently a multiple of 2.8. This is below the average for the past 10 years.

Investors are faced with the opportunity to buy one of the best companies in the world at a valuation that isn’t exactly ridiculous. Now is a good time to take action.