Should you buy Amazon stock in 2024

Amazon, with a market capitalization exceeding $2 trillion, ranks among the world's most valuable companies. However, the Seattle-based giant is encountering intensified competition in digital sales from traditional retail giants like Walmart and Target, as well as emerging challengers such as Temu and Shein. In the realm of cloud computing, Amazon Web Services (AWS) faces a fierce competition with Microsoft to dominate as the preferred platform for generative artificial intelligence. Moreover, Amazon, often dubbed the "Everything Store," is navigating a significant antitrust scrutiny from the U.S. government.

Amazon's cloud business growth will be the focal point of attention during the second-quarter earnings announcement. Following significant investments in AI, investors should scrutinize Amazon's liquidity position to verify effective capital allocation by management. Despite a temporary stock sell-off, long-term investors need not be overly concerned about the precise timing of their stock purchases.

Amazon reports second-quarter earnings on Aug. 1.

In 2024, the tech sector has shown resilience, driven by ongoing enthusiasm surrounding artificial intelligence (AI). However, there's a growing concern about whether future AI-related growth is already reflected in current valuations. In the last decade Amazon’s revenue grew about 540% while its net income moved from losing money to 30.42 billion in profits this past year. Recently, I've been closely monitoring Amazon (AMZN -0.32%). Despite a 20% increase in its share price year-to-date, the stock has experienced a decline of approximately 7% in July.

One of Amazon's most important businesses is its cloud-computing platform, AWS. AWS competes fiercely with Microsoft's Azure and Alphabet's Google Cloud Platform. Unsurprisingly, Amazon followed suit and countered Microsoft with a move of its own. Specifically, the company invested $4 billion into an AI start-up called Anthropic.

Three Primary Factors Influencing Amazon's Stock Performance

Amazon's stock performance hinges on key factors including e-commerce growth amidst intensified competition, the trajectory of Amazon Web Services (AWS) against rivals like Microsoft Azure, and regulatory challenges such as antitrust scrutiny.

Economic conditions, consumer sentiment, and technological advancements in AI and advertising also play pivotal roles in shaping investor sentiment and the company's valuation.

1. E-commerce Triumph and Challenges:
   Amidst Covid's surge in sales benefiting Amazon, intensified competition from rivals also escalated. Despite online retail comprising only 15% of total retail sales, sustaining rapid growth in e-commerce will prove more challenging in the future compared to a decade ago.
2. Amazon Web Services (AWS):
   In the first quarter of 2024, AWS generated $25.04 billion in revenue, positioning it to surpass $100 billion in total sales for the year. Despite this, its year-over-year growth of 13% lags behind competitors such as Microsoft's Azure and Google Cloud. Amazon faces the risk of losing market share to Microsoft before 2030 if it cannot reverse this trend.
3. Advertising:
   Amazon concluded 2023 with a $47 billion advertising business, marking a 24% growth for the year. This segment has the potential to become another high-margin revenue stream for Amazon, complementing its predominant profits from AWS. This diversification could propel Amazon towards achieving over $100 billion in annual profits.

Amazon (AMZN) Stock Price Prediction in 2025

Predicting stock prices involves a lot of uncertainty and is highly speculative. However, based on current trends and market conditions, here's a general viewpoint on Amazon's stock price in 2025:

Amazon's stock price in 2025 will likely be influenced by several factors including the performance of its core e-commerce business, growth in Amazon Web Services (AWS), advancements in its advertising segment, and overall market conditions.

• E-commerce Growth: Amazon's e-commerce business is expected to continue growing, albeit possibly at a slower rate compared to previous years due to market saturation and increased competition.
• AWS Performance: AWS remains a key driver of Amazon's profitability. If AWS continues to expand and maintain its leadership in the cloud computing market, it could positively impact Amazon's stock price.
• Advertising Revenue: Amazon's advertising business has been growing rapidly and contributing significantly to its revenue. Continued growth in this segment could provide a boost to the stock price.
• Market Conditions: External factors such as macroeconomic trends, regulatory changes, and investor sentiment will also play a role in determining Amazon's stock price.

Given these factors, while specific predictions are challenging, analysts and investors generally remain optimistic about Amazon's long-term prospects. It's essential for investors to conduct thorough research and consider all relevant factors before making investment decisions.
24/7 Wall Street’s 12 month forecast projects Amazon’s stock price to be $225. We see AWS continue its current 12% growth rate but see Amazon’s advertising business outperforming analyst expectations, particularly in the 4th quarter of 2024 with more streaming ad impressions being sold.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.