Amazon.com, Inc. (NASDAQ:AMZN) and Amazon stock are tremendous juggernauts that cannot and will not be stopped. Amazon is a monster that keeps finding more powerful growth sectors that it can extend its tentacles into. Investors should not miss the chance to buy the shares of this amazing company which still obviously has tremendous amounts of growth ahead of it.
The company’s first-quarter results showed how its many highly potent businesses provide it with so much strength and resiliency, making AMZN stock a surprisingly low-risk investment.
Even though the growth of its cloud business, usually described as its main growth engine, slowed, the company was still able to beat analysts’ consensus estimates and Amazon stock climbed despite the market’s weakness. Two of AMZN’s businesses that don’t get a lot of publicity may have been major factors behind the beat. Specifically, the company’s “Other revenue” category, which likely includes advertising revenue, jumped 56% to $850 million, and its worldwide shipping revenue surged 37% to $2.5 billion.
AMZN: First-Quarter Results Show Strength, Resiliency
So even in the unlikely event that research firm Pacific Crest is right and competition significantly lowers the growth rate of Amazon’s e-commerce and cloud businesses, (I say unlikely because both categories are growing explosively and does anyone seriously believe that millions of Americans are going to abandon AMZN for Wal-Mart Stores Inc (NYSE:WMT)?) Amazon’s other businesses can and probably will more than take up the slack.
In addition to advertising and shipping, its India business and its Alexa product are seriously ramping. Not to mention, Amazon still has its business-to-business e-commerce initiative, its grocery business and its forays into new e-commerce categories such as clothes.
It has become somewhat trite to note that AMZN’s two largest businesses — e-commerce and the cloud — have so much room for growth. E-commerce only accounted for around 12% of U.S. retail sales last year, while cloud penetration continues to grow fairly quickly.
Amazon Stock: Outshining Two Other FANG Stocks
But what isn’t discussed too much is how a couple of other large tech companies, two of Amazon’s peers in the famous FANG group, don’t have anywhere close to Amazon’s growth potential. Specifically, Apple Inc. (NASDAQ:AAPL) relies on the highly saturated smartphone market, while Netflix, Inc. (NASDAQ:NFLX) has also largely reached the saturation point in the U.S. market.
Unlike AMZN, whose cloud business has taken off in recent years and whose Alexa business looks poised to surge, neither Apple nor Netflix have benefited from any new growth engines in recent years. The Apple Watch hasn’t made much of a dent and its TV initiative hasn’t gotten off the ground, while Netflix hasn’t really tried anything new since it launched its streaming business in the last decade.
In time, it will become apparent to Apple and Netflix investors that those companies can’t hold a candle to Amazon stock when it comes to growth and future opportunities. Many of them will jump ship, and a good portion of those will buy AMZN stock.
Amazon has many tremendous powerful growth engines on the horizon, including its progress in one of the world’s largest e-commerce markets, one of the world’s most popular artificial intelligence products, digital ads and its introduction of new types of products on its flagship website.
So even if the growth of its larger businesses slow, its newer initiatives will more than compensate. And as more investors realize just how potent Amazon’s positive growth catalysts are, they will buy AMZN stock, enabling it to triple within two years from now and become the world’s most valuable company by market cap.
As of this writing, Larry Ramer owned shares of AMZN stock.
