Amazon’s stock (NASDAQ: AMZN) has seen a 16% rise over the past year, slightly outpacing the NASDAQ’s increase of 14%. After reaching over $240 in January 2024, the stock fell more than 30% to just under $170 by April due to trade policy concerns. However, the stock rebounded by 30% from those lows and has increased by 43% since early 2024, largely driven by a 30% rise in its price-to-sales ratio, a 13% increase in revenue from $575 billion to $650 billion, and a 2% rise in shares outstanding to 10.8 billion.
The revenue growth is attributed to trends in e-commerce, streaming, and digital advertising. Amazon Web Services (AWS) was a significant contributor, showing a 19% surge, while North American sales rose by 10% and international sales by 9%. AWS has also improved Amazon’s operating margin dramatically, expanding from 6.4% to 11.0% since 2023.
Despite this growth, potential challenges include rising competition from Microsoft Azure and Google Cloud in the cloud computing sector and risks associated with Amazon’s substantial capital expenditures, which totaled $161 billion since 2023. Amazon’s stock is currently priced at $217, with a price-to-sales ratio of 3.6, nearing its five-year average of 3.2.
