I’ve been bullish on Amazon.com, Inc. (AMZN) stock for some time, for a myriad of reasons. The company is a textbook example of one that creates new and innovative products that truly change the way we live.
You’ve likely experienced this first-hand already in one way or another, whether you’re a loyal Prime member or indirectly using the company’s popular cloud computing services.
Lately though, Amazon stock hasn’t been posting the sizzling gains investors are used to. For the last month or so, shares have more or less moved sideways.
The question this poses is whether the slowdown is just a summer lull, or whether it’s a sign that AMZN stock’s prospects are actually changing for the worse.
Why AMZN Stock’s Still Got It
The thing investors need to remember about Amazon stock is that its time horizon is vastly different from that of most picks. The company is a true innovator, but that means that sometimes investments take a little longer to pay off than they would for other product-release-driven companies.
Consider, for example, the relatively recent release of Alexa. Amazon surprised a lot of people with this voice-driven hardware release, which was far more popular than many expected considering the fact that the space is not just crowded, but often disappointing.
One of Alexa’s differentiators is that it can connect to third-party apps and services. Hyundai says it will connect to its cars, for example, while users can already order things via Uber or StubHub using the device. This connectivity shows Amazon’s true differentiator. Alexa is far more than just a hot product from Amazon; it’s an example of the sweeping ecosystem the company is building.
The release of a streaming music service from Amazon, for example, might be a bit head-scratching, or at least shrug worthy on the surface considering again the space is crazy crowded with players like Spotify and Apple Inc. (AAPL) dumping loads of resources into maintaining their streaming audiences.
But the music service makes a lot more sense when it’s thought about in the context of the Alexa device — a device that’s generating headline after headline about the kinds of capabilities Amazon plans to add to it. That kind of continued innovation is exactly why investors have and will keep snatching up AMZN stock.
Besides, these consumer offerings — which are the most noticeable innovative technologies for everyday people — are just the tip of the iceberg. Amazon isn’t just worried about selling gadgets or services, it’s transforming the entire shopping experience. That’s going to pay off when the holiday season rolls around.
As you’re likely aware, Amazon operates 77 large-scale fulfillment centers here in the United States, and it has 17 more in progress. The company just announced plans to raise its storage fees in November and December by 213% and 102%, respectively, year-over-year to accommodate increased holiday demand and “maximize inventory.”
Once again, this is the kind of progress AMZN stock investors want to see. The company has a knack for juggling numerous balls, all of which are pushing its vision and reach forward seemingly constantly.
A lull in the AMZN stock price would be worrisome if there was a lull in news like this out of the company, but that’s quite simply not the case. Amazon continues to innovate and to do so on a large scale. AMZN stock will soon reflect that reality once again.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
