Amazon Stock Surges to $200 Amid Financial Gains
After reaching a multi-year low of approximately $84 in early 2023, Amazon‘s (NASDAQ: AMZN) stock price has more than doubled to $200, reflecting an improvement in financial performance.
As Amazon navigates opportunities in artificial intelligence (AI) alongside challenges in e-commerce, investors may question whether to buy, hold, or sell Amazon stock.
Amazon’s Performance in 2024
Examining Amazon’s results for 2024 reveals solid performance across multiple areas.
Revenue increased by 11% to $638 billion, with North America rising 10%, International up by 9%, and Amazon Web Services (AWS) growing 19%. Such growth stands out given Amazon’s massive scale.
Operating profit surged 86%, climbing from $36.9 billion to $68.6 billion, highlighting effective cost management and execution.
Delivery speeds improved, with a 65% increase in same-day or overnight deliveries for Prime members compared to Q4 2023. Amazon also launched Amazon Haul, a new low-price shopping service to compete with Temu and Shein.
AWS saw advancements in 2024, including the introduction of the Trainium2 AI chip and improved models in Amazon Bedrock. These developments bolster Amazon’s position in the evolving AI landscape.
Future Prospects for Amazon
While e-commerce remains a core business for Amazon, key growth drivers are likely to emerge from other segments.
AWS is expected to lead, capitalizing on trends like AI advancements. The global AI market is anticipated to grow from $294 billion in 2024 to $1.772 trillion by 2032, reflecting a compound annual growth rate of 29%.
Amazon’s advertising sector is also gaining momentum, generating $14 billion in revenue in Q1 2025, a rise of 18% year over year.
The e-commerce segment, however, may demonstrate mixed results, benefiting from market share gains but facing challenges from tariffs and new competition.
Despite these potential hurdles, Amazon’s “Day 1” culture—emphasizing customer focus and innovation—positions the company well for future growth, even if at a slower pace due to its size.
Amazon’s Stock Valuation
Investors should assess Amazon’s stock valuation in relation to historical data. Currently, the price-to-sales (P/S) ratio stands at 3.3, within a five-year range of 1.7 to 4.6.
This valuation suggests that while Amazon’s stock is not a bargain, it is not excessively priced compared to historical valuations.
Investment Implications
Amazon’s strong 2024 performance underscores its execution capabilities. The high-margin segments of AWS and advertising are poised for growth, driven by trends like AI adoption.
Although e-commerce faces uncertainties, Amazon’s culture can help maintain its competitive edge. Existing investors should hold the stock, while long-term investors might consider establishing a small position for future growth.
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John Mackey, former CEO of Whole Foods Market, is on The Motley Fool’s board. Lawrence Nga holds no position in any stocks mentioned. The Motley Fool recommends Amazon and has a disclosure policy.
The views expressed here are those of the author and do not necessarily reflect those of Nasdaq, Inc.
