Amazon: The Underappreciated Titan of the Stock Market
As we approach the end of 2024, one major player in the stock market has often been overlooked: Amazon (NASDAQ: AMZN). With a year-to-date increase of 37%, there’s a strong case for recognizing the potential it holds for investors heading into 2025.
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Why Amazon Stands Out
Amazon is known for its impressive size; it boasts a market cap of $2.2 trillion and annual revenue around $600 billion. This places the company as the fifth-largest American firm by market cap and the second-largest by revenue.
Amazon consists of multiple business units that would each be significant in their own right. For instance, Amazon Web Services (AWS) generates more than $100 billion annually and is growing by 19% year over year. If AWS were an independent company, it would rank as the 33rd-largest U.S. firm by revenue, just ahead of Tesla and Nvidia.
In addition, Amazon’s advertising segment is substantial, producing approximately $50 billion over the last year. If separated, it would place among the top 100 U.S. companies by revenue, on par with sportswear giant Nike.
And of course, Amazon’s well-known e-commerce division brings in nearly half a trillion dollars in revenue annually. While not all segments are growing swiftly, this diversity helps Amazon’s stock continue to rise. In times of struggle for one part of the business, another can often offset the loss, stabilizing overall performance and supporting a steady stock price.
Strong Growth and Profits Ahead
Ultimately, Amazon’s success stems from its consistent increase in both revenue and profits. Recent data suggests it will maintain this trend. For instance, the latest quarterly earnings report for the three months ending on September 30, 2024, revealed:
- 11% total revenue growth
- $17.4 billion in operating income (an all-time high)
- $70.8 billion in 12-month free cash flow (an all-time high)
These metrics—total revenue growth, operating income, and free cash flow—are critical for any company. Notably, Amazon is hitting record highs in two of these areas, while showing solid overall performance in revenue growth.
This performance reflects CEO Andy Jassy’s strategic execution, which aims to enhance efficiency and profitability. As profits and free cash flow grow, they can be reinvested to boost shareholder value through dividends, buybacks, and strategic moves.
Now is a good time for investors to pay attention. Amazon is performing exceptionally, especially considering its stock has risen over 1,000% in the last decade.
A New Investment Opportunity Awaits
If you’ve felt you missed out on investing in rising stars like Amazon, there’s still hope. Rarely, analysts recommend a “Double Down” stock—companies they believe are poised for a significant rise. Here are some highlights:
- Amazon: Investing $1,000 when we first recommended it in 2010 would now be worth $23,295!
- Apple: A $1,000 investment from 2008 would have grown to $42,465!
- Netflix: An investment of $1,000 since 2004 would now be worth $434,367!
Currently, three more exceptional companies are receiving “Double Down” alerts. This might be the chance you’ve been waiting for.
See 3 “Double Down” stocks »
*Stock Advisor returns as of November 11, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Amazon, Nike, Nvidia, and Tesla. For full disclosure, please refer to The Motley Fool’s policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
