Amazon’s stock has seen a significant increase, particularly after joining the Dow Jones Industrial Average in February. The company’s success can largely be attributed to its growth, with Amazon Web Services (AWS) being a key factor in its value. AWS remains a leader in cloud infrastructure, with a significant market share and strong customer growth. As a result, AWS has had a major impact on Amazon’s overall business, with its operating income growing consistently over the years.
While Amazon’s traditional metrics like price-to-sales ratio may suggest the stock is expensive, the company’s operating income and margin have improved significantly in recent years. This indicates a higher quality business that is on track to reach constant profitability. Analyst estimates also suggest positive growth for Amazon in the coming years, which could further improve its valuation.
However, despite its strong performance, Amazon’s stock is nearing its upper limit, and investors should consider whether the stock’s valuation reflects its growth potential. While Amazon remains a good buy, it may no longer be a must-buy as it once was. The company will need to continue demonstrating growth and sustaining its higher margins to justify its current valuation.
In the short term, Amazon’s stock valuation may be stretched as it continues to rise. However, its track record of generating profits and its potential for long-term growth make it an attractive option for patient investors. Overall, Amazon’s success is undeniable, but investors should be mindful of its valuation and growth prospects moving forward.
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https://www.fool.com/investing/2024/07/06/amazon-buy-stock-best-performing-dow-jones/?source=iedfolrf0000001
:max_bytes(150000):strip_icc()/GettyImages-1248364818-d6f6d28199d740a4a1e87b6009099772.jpg?w=1200&resize=1200,0&ssl=1 "Analysts believe that Advertising Trends could boost Amazon Stock on AWS")
