Recently, Amazon.com (NASDAQ:AMZN) has become one of my least-favorite investments to discuss. For starters, everyone wants to talk about Amazon stock, which is great for the first thousand go-arounds. But now, I feel like a one-hit wonder asked to play that song one more time.
Plus, I’m not sure what else I can add to the discussion. Whether you want to admit it or not, Amazon.com is the greatest company on earth. No one, not Alibaba (NYSE:BABA), not Microsoft (NASDAQ:MSFT), not even trillion-dollar Apple (NASDAQ:AAPL) can dethrone Jeff Bezos’ house.
So I’m often left to reiterate the obvious: Amazon.com will take over the world. By logical deduction, you’ll want exposure to Amazon stock, if you can afford it.
But in searching for any new angles for this all-angles-covered company, I realized something: we are grossly underestimating AMZN stock.
You read that correctly. The e-commerce giant, which has disrupted almost every single brick-and-mortar retailer, and is stridently pushing into new sectors, is undervalued.
I’m not just talking about the company’s own push to a $1-trillion market capitalization. At time of writing, the equity value stands just shy of $995 billion. Amazon stock merely needs to sneeze in the right direction, and the resultant momentum will swing it above the benchmark.
Nor am I talking about which one of the two stalwarts will hit $2 trillion first. Of course the answer is AMZN stock! As our own James Brumley noted, if Amazon.com was the only website in the world, you could practically satisfy all your demands through its platform.
No, what I mean is that Amazon stock is criminally underrated. Unless Amazon splits shares, each unit’s price point could become the equivalent of an entry-level sedan.
Amazon Stock on the Cusp of Demographic Greatness
The first clue that we’re not really appreciating Amazon.com’s true potential is its average customer age. At approximately 38 years, the company currently sells to “halfway” consumers.
By this term, I’m referring to the fact that this demographic enjoys both digital purchases as well as traditional ones. The reason is simple. We’re creatures of habit. Older millennials and Generation X grew up in an analog era, but matured into adulthood during the internet age. They enjoy the conveniences that digitalization offers, but they’re not fully vested.
Generation Z, on the other hand, knows no other way but the digital route. For instance, according to the Pew Research Center, only 14% of American adults had internet access in 1995. But nearly two decades later, that figure jumped to 87%.
While we marvel at the latest gizmos and gadgets for their functionality and convenience factors, Gen Z accepts these technologies as a given. The only equivalent I can think of is this: When we flip the switch, we expect the lights to turn on. We never marvel at the miracle of electrical engineering.
Therefore, when Gen Z comes of age and enters their prime earning years, AMZN stock will receive another bullish cycle. For the first time in history, a digital company and a natively digital consumer base will merge.
Obviously, this dynamic benefits all consumer-electronics companies. But only Amazon stock represents the go-to hub for all things. Hence, Jeff Bezos’ evil genius. His aggressive inroads into seemingly disparate industries followed a demographic masterplan.
By acquiring Whole Foods Market, Bezos will dictate how Gen Z buys groceries. Amazon’s presence in the cloud will influence tomorrow’s work culture. Finally, its healthcare campaign reflects the company’s desire to impose a cradle-to-grave hegemony.
AMZN Stock Stands Alone
For many of you, this is a scary thought. But the reality is that no one can stop this train.
Practically speaking, Amazon stock enjoys an uncontested monopoly. Sure, President Trump is unhappy about Amazon.com, but even he is helpless in this matter.
I’d bet anything that Trump himself probably shops on the e-commerce platform whenever he has a free moment. Which is to say that Amazon is e-commerce. Instinctively, we know this because if its website ever went down permanently, we’d all panic.
If you’re still not convinced that AMZN stock is severely undervalued, consider that with our currently mixed demographic, the underlying company will take nearly half of all U.S. e-commerce sales this year.
The second-most dominant e-commerce player is eBay (NASDAQ:EBAY), which will take less than 7%. Big-box retailer Walmart (NYSE:WMT) for all its huffing and puffing in e-commerce will bring home only 3.7%.
Already, Amazon has entered loony-tunes territory. But what will happen when Gen Z asserts its earnings power? That reality is only a few years away, which means we’ll soon see absolutely crazy valuations for AMZN stock.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.