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Amazon has come a long way since its founding as an online bookstore 30 years ago. In the past decade alone, the company’s stock has gone up more than 1000%. Its market cap is close to a staggering $2 trillion, and the company generated about $575 billion in sales in 2023. Surely it’s too late to come on board, right? Not necessarily. Despite these eye-popping numbers, Amazon still has plenty of room to grow.
What's New at Amazon?
At its heart, Amazon is still primarily an e-commerce marketplace. Physical sales still represent 84% of all retail sales, which leaves a huge growth opportunity for e-commerce. As the undisputed leader, Amazon is well-poised to take advantage of that growth.
But an increasing segment of Amazon’s business is cloud computing where, once again Amazon Web Services is at the top of the pack. This segment is growing rapidly as more and more companies move their storage to the cloud. Amazon generated an incredible $94 billion in this area over the past 12 months.
Additionally, Amazon has an ideal setup for digital advertising, thanks to its Prime Video service and e-commerce site. Digital ads represent an immense growth opportunity, with the sector as a whole bringing in about $47 billion in annualized revenue in the past quarter. If Amazon decides to make targeted ads a focus, it would be in excellent shape to cash in.
Looking to the Future
Amazon is currently trading at a very reasonable price-to-sales ratio of just 3.3. Historically, its net income not been incredibly impressive, partially due to its tendency to heavily reinvest in the company. But things are starting to change. In the first quarter of 2024, the company posted operating income of more than $15 billion, which is up over 200% YOY. By 2026, its annual operating income should be roughly triple its 2023 numbers. Those who want to invest in Amazon may do well to go ahead and buy in soon, before it becomes more expensive.
Lisa Fritscher does not have positions in Amazon. Stocks.News has positions in Amazon.
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Contributing Writer
Lisa Fritscher has been a contributing writer for App.Stock.News since 2024. Lisa has been interested in investing since winning The Stock Market Game in high school. In more than a decade as a professional writer, she has written consumer-facing financial information and advice articles for a wide variety of publications. She has a Bachelor of Arts in Psychology from the University of South Flori...
