E-commerce and cloud giant Amazon (NASDAQ:AMZN) has experienced remarkable profitability and stock price growth in the past decade, with a recent surge in earnings propelling the stock to new highs. AWS, Amazon’s cloud segment powered by artificial intelligence, strong retail momentum, and optimization initiatives, have me optimistic about the stock’s future prospects. Following the strong first-quarter results, I plan to buy shares at current levels.
Amazon reported stellar first-quarter results driven by strong performances across all segments, including cloud, advertising, and e-commerce. Adjusted earnings beat expectations at $0.98 per share, more than triple the previous year’s earnings. Net sales grew 13% to $143.3 billion, with AWS revenue reaching $25 billion, surpassing estimates. Operating income for all segments combined increased 219% year over year to $15.3 billion.
AWS, a longstanding leader in the cloud market, saw record growth and margins in the first quarter due to the impact of AI investments. Sales grew 17%, reaching a run-rate milestone of $100 billion in revenue, with operating income increasing by 84%. Amazon’s significant investments in AI are reflected in its financial results, with a majority of CapEx focused on strengthening AWS infrastructure and AI efforts.
Despite historical high valuations, Amazon shares currently trade at a significant discount, making them an attractive investment opportunity. With a forward EV/EBITDA ratio of 14.3 times (compared to a historical average of 20.6 times) and a P/S ratio of 3.0x, Amazon is considered undervalued compared to its peers.
Wall Street analysts maintain a Strong Buy consensus rating on Amazon stock, with a price target implying a 20.5% upside potential from current levels. The company’s diverse business portfolio, strong retail performance, and promising growth drivers like AWS’s AI initiatives position Amazon favorably for long-term growth.
In conclusion, Amazon’s recent performance, strategic investments in AI, and leadership changes suggest a positive trajectory for the company. With its solid fundamentals, strong growth potential, and attractive valuation, Amazon presents a compelling opportunity for investors seeking long-term growth.
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https://finance.yahoo.com/news/amazon-nasdaq-amzn-prepping-next-040223490.html
