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Amazon’s Stock: A Bullish Journey

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Amazon warehouse facility storefront exterior in Houston, TX.

The Rise and Shine of Amazon’s Stock

Amazon’s (NASDAQ:AMZN) stock is on fire, outperforming the S&P 500 with a whopping 16.78% surge since June. My bullish recommendation to buy the stock in June has proven itself, with the company exceeding market performance. The company’s online store sales, the cornerstone of its retail revenue, have picked up speed, paving the way to a remarkable 7% YoY growth rate in Q3 of 2023, after a flattish performance in Q1 2023. The third-party seller services have also shown substantial acceleration, climbing from 17.8% YoY in Q1 2023 to a robust 19.7% YoY in Q3 2023. Moreover, Amazon’s record-breaking Black Friday and Cyber Monday sales ignite confidence as we expect a solid performance in Q4 2023.

The Future of Amazon: An Unfiltered Look at the Company’s Growth and Potential

Brace yourself! The Amazon powerhouse is currently experiencing a meteoric rise thanks to heroic levels of innovation and blazing efficiency that have set a new standard in both backend and frontend operations. The company is riding the digitalization wave as businesses transition to the cloud, representing the future of global infrastructure. And let me tell you, AWS is gearing up to be the knight in shining armor, perfectly poised to ride this technological tsunami into the next frontier of business.

AWS and the AI Revolution

If you think Amazon is just chilling in the shade, think again! Amazon has unleashed a legion of new tools, specifically designed to create experiences so intuitive, you’d think Alexa reads minds. Brands like BMW, iRobot, and Philips Hue are already flexing these new tools, and we’re just getting started. Amazon Bedrock has descended from the heavens to offer a managed solution for those looking to build generative AI applications. It’s like the whole world is getting a front-row seat to Amazon’s own LLM, Titan, offering security, access control, and features consistent with the rest of their AWS applications.

That’s like adding nitro to a rocket ship.

And with the condition of enterprise customers’ budgets improving, it’s game on for AWS as it attracts them to its cloud services. It’s like throwing a carnivore into a field of wild prey. Get the picture?

Buckle up for Margin Analysis and Outlook

That’s right, things are firing on all cylinders! The company’s margin is thriving, and with operating leverage and cost-saving initiatives, Amazon is pulling off some serious ninja moves. The regionalization of national fulfillment centers has been a game-changer, cutting costs and paving the way for an eye-popping year-over-year increase in operating margin to 7.8% and a 390 bps year-over-year increase in AWS segment operating margin to 30.3%.

I mean, this is like hitting the sweet spot on a home run.

Peering into the future, it’s crystal clear that the company is set to keep the margin growth party rolling. With continued growth acceleration in the AWS segment, Amazon’s margin mix is going to improve, and let’s not forget the operating leverage in AWS segments coupled with Amazon’s retail business. It’s like Amazon has found the treasure map, and X marks the spot!

Valuation and Conclusion: The Pot of Gold

Now, let’s talk numbers. Amazon is currently a hot potato, trading at a forward P/E ratio representing a discount compared to its historical 5-year average. The forward EV/EBITDA and EV/Sales valuation metrics are also roaring below their historical averages. With favorable valuations and promising prospects, Amazon is the golden ticket of investment opportunities. It’s like finding buried treasure without the treasure map!

The sun’s shining bright on Amazon. The company’s growth potential over the next several years is brighter than a supernova, benefitting from strong growth drivers and execution in both retail and AWS business. So, here’s the scoop: Amazon is not stepping off the gas any time soon. In fact, we’re maintaining a buy rating on the stock. It’s like sitting in the front seat of a fast rollercoaster. Hold onto your hats, folks!

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