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Where Will Amazon Stock Be in 1 Year? | The Motley Fool
Since the beginning of last year, Amazon (AMZN -0.29%) stock has experienced a resurgence. It is near an all-time high, as its recovery erased all the losses of the 2022 bear market and rose by about 55% over the last year. With that gain, investors may question what it can do over the next year. Will its march higher continue, or will its considerable growth over a short time frame set it up for another pullback over the next 12 months? At first glance, investors may credit Amazon's gains with artificial intelligence (AI). Indeed, the optimism surrounding generative AI has boosted stocks such as Nvidia and Palantir. With its position as the leading cloud infrastructure provider through its Amazon Web Services (AWS) segment, mastering AI is critical to Amazon maintaining its market lead. To this end, Amazon invested $4 billion in a company called Anthropic. Anthropic's software trains Amazon's generative AI models by working with AWS's proprietary AI chips. Considering the tremendous demand for such technology, Amazon's work in this area may foster a competitive advantage in the AI field. However, AWS is not the only reason to like Amazon stock. Although online sales are a large but relatively slow-growing part of the business, the company has leveraged its massive web presence to develop separate businesses, and the most successful is likely its digital advertising business. Considering the success of Alphabet and Meta Platforms in advertising, it may not surprise investors that this is the fastest-growing business listed in its quarterly reports. In the first quarter of 2024, digital ads brought in almost $12 billion in net sales. That was a yearly increase of 24%, outpacing the 17% growth rate of AWS. Overall, Amazon's net sales came in at $143 billion in the first quarter of 2024, 13% higher than year-ago levels. That also means the company's sales have kept pace with past quarters, as net sales grew by 12% annually in 2023. During that time, Amazon limited cost and expense increases to 4%, allowing net income to rise to over $10 billion. In comparison, Amazon earned just under $3.2 billion in the first three months of 2023. Despite such improvements, the company expects a slowdown as it forecasted a net sales increase between 7% and 11% in Q2, citing unfavorable foreign exchange rates as a reason for that slowdown. Nonetheless, the rapid recovery in net income has reflected well on its valuation. Its P/E ratio of 56, while higher than some peers, is actually near a multiyear low for Amazon. Hence, the fact that it could experience significant multiple expansion without rising above historical norms should bode well for the stock. Amid its low valuation, Amazon stock appears on track to closely approximate last year's growth rate over the next year. Amazon could experience another bear market pullback if the slowing in net sales growth comes to pass and continues. However, Amazon seems to have emerged as an AI leader, and its market lead in the cloud and investments in AI bode well for the company's future. Moreover, Amazon's retailing segments seem to have fostered success in digital advertising and other businesses. Hence, even if the online sales business does not perform well, continued successes in smaller but more profitable businesses could take the internet and direct marketing retail stock higher over the next year.
[2]
Where Will Amazon Stock Be in 1 Year?
Since the beginning of last year, Amazon (NASDAQ: AMZN) stock has experienced a resurgence. It is near an all-time high, as its recovery erased all the losses of the 2022 bear market and rose by about 55% over the last year. With that gain, investors may question what it can do over the next year. Will its march higher continue, or will its considerable growth over a short time frame set it up for another pullback over the next 12 months? Why Amazon stock has risen At first glance, investors may credit Amazon's gains with artificial intelligence (AI). Indeed, the optimism surrounding generative AI has boosted stocks such as Nvidia and Palantir. With its position as the leading cloud infrastructure provider through its Amazon Web Services (AWS) segment, mastering AI is critical to Amazon maintaining its market lead. Data source: Statista. To this end, Amazon invested $4 billion in a company called Anthropic. Anthropic's software trains Amazon's generative AI models by working with AWS's proprietary AI chips. Considering the tremendous demand for such technology, Amazon's work in this area may foster a competitive advantage in the AI field. However, AWS is not the only reason to like Amazon stock. Although online sales are a large but relatively slow-growing part of the business, the company has leveraged its massive web presence to develop separate businesses, and the most successful is likely its digital advertising business. Considering the success of Alphabet and Meta Platforms in advertising, it may not surprise investors that this is the fastest-growing business listed in its quarterly reports. In the first quarter of 2024, digital ads brought in almost $12 billion in net sales. That was a yearly increase of 24%, outpacing the 17% growth rate of AWS. How this affects the stock Overall, Amazon's net sales came in at $143 billion in the first quarter of 2024, 13% higher than year-ago levels. That also means the company's sales have kept pace with past quarters, as net sales grew by 12% annually in 2023. During that time, Amazon limited cost and expense increases to 4%, allowing net income to rise to over $10 billion. In comparison, Amazon earned just under $3.2 billion in the first three months of 2023. Despite such improvements, the company expects a slowdown as it forecasted a net sales increase between 7% and 11% in Q2, citing unfavorable foreign exchange rates as a reason for that slowdown. Nonetheless, the rapid recovery in net income has reflected well on its valuation. Its P/E ratio of 56, while higher than some peers, is actually near a multiyear low for Amazon. Hence, the fact that it could experience significant multiple expansion without rising above historical norms should bode well for the stock. Amazon in one year Amid its low valuation, Amazon stock appears on track to closely approximate last year's growth rate over the next year. Amazon could experience another bear market pullback if the slowing in net sales growth comes to pass and continues. However, Amazon seems to have emerged as an AI leader, and its market lead in the cloud and investments in AI bode well for the company's future. Moreover, Amazon's retailing segments seem to have fostered success in digital advertising and other businesses. Hence, even if the online sales business does not perform well, continued successes in smaller but more profitable businesses could take the internet and direct marketing retail stock higher over the next year. 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 Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $780,654!* 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*. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Will Healy has positions in Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Oracle, Palantir Technologies, Salesforce, and Tencent. The Motley Fool recommends Alibaba Group and International Business Machines and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Amazon's stock has shown resilience and growth potential, with analysts predicting a positive trajectory for the e-commerce giant over the next year. This article examines the factors influencing Amazon's stock performance and future prospects.
Amazon (NASDAQ: AMZN) has demonstrated remarkable resilience and growth potential in recent times. The e-commerce giant's stock has surged by approximately 55% year-to-date, outpacing the broader market's performance 1. This impressive run has caught the attention of investors and analysts alike, prompting discussions about the company's future trajectory.
Wall Street analysts remain bullish on Amazon's prospects, with the consensus price target suggesting significant upside potential. The average 12-month price target stands at $174.16, representing a potential increase of about 29% from its current trading price 2. Some analysts are even more optimistic, with high-end estimates reaching $220, implying a possible 63% upside 1.
Several factors contribute to the positive outlook for Amazon's stock:
E-commerce dominance: Amazon continues to lead the e-commerce market, with its vast product selection and efficient delivery network 1.
Cloud computing strength: Amazon Web Services (AWS) remains a major revenue driver, maintaining its position as the leading cloud infrastructure provider 2.
Artificial Intelligence integration: The company's investments in AI technology are expected to enhance operational efficiency and create new revenue streams 1.
Advertising potential: Amazon's advertising business is growing rapidly, leveraging its vast customer data to deliver targeted ads 2.
Despite the optimistic outlook, Amazon faces some challenges:
Economic uncertainty: Macroeconomic factors, including inflation and potential recession fears, could impact consumer spending 1.
Regulatory scrutiny: Ongoing antitrust concerns and potential regulatory actions pose risks to Amazon's business model 2.
Competitive landscape: Intense competition in both e-commerce and cloud computing sectors may pressure Amazon's market share and profitability 1.
Amazon's current valuation metrics present a mixed picture. While its price-to-earnings (P/E) ratio of 74 may seem high compared to the S&P 500 average, it's relatively low for Amazon's historical standards 2. The company's price-to-sales (P/S) ratio of 2.6 is also considered reasonable given its growth prospects and market position 1.
The overall sentiment towards Amazon remains positive, buoyed by the company's strong fundamentals and growth potential. However, investors should be aware that stock prices can be volatile and subject to market fluctuations. The projected growth in Amazon's stock price is based on current analyst estimates and market conditions, which may change over time 2.
As with any investment decision, potential investors should conduct thorough research and consider their individual financial goals and risk tolerance before making investment choices regarding Amazon or any other stock 12.
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Amazon's stock rallied 44.4% in 2024, driven by AI innovations in cloud computing and e-commerce efficiency improvements. The company's strategic investments and partnerships in AI are positioning it for continued growth.
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An in-depth look at Amazon's recent stock performance following its earnings report and projections for the company's future in the next year.
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Amazon's investment in AI across its e-commerce and cloud computing sectors is yielding significant returns, positioning the company as a leading AI stock with strong growth potential.
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Amazon reports strong Q4 2024 earnings with record profits, but faces challenges due to heavy AI investments and lower Q1 2025 guidance. The company's focus on AI and cloud computing shapes its future strategy.
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Amazon's upcoming Q2 earnings report sparks investor interest. Historical profitability analysis and recent performance suggest potential for stock price movement and investment opportunities.
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