Editor’s note: This column is part of our Best Stocks for 2019 contest. The Readers’ Choice pick for the contest is Amazon (NASDAQ:AMZN).
I think it’s official — InvestorPlace.com readers love Amazon (NASDAQ:AMZN). It won our Readers’ Choice poll for the Best Stocks contest for the third year in a row.
In fact, I think our readers may like Amazon even more this year than last, as Amazon stock doubled up the votes on the second-place pick, Microsoft (NASDAQ:MSFT). There was no question — the sentiment is strong with this one.
The reasons why people believe in AMZN haven’t changed. It’s the most ubiquitous name in the world of e-commerce, and it has edged its way into physical stores as well. Amazon Web Services, its cloud division, continues to grow wildly and maintain a monstrous advantage in market share over its competitors. It takes up half of that particular pie, with its only significant competition being Microsoft — at less than 10%. Amazon Prime continues to be a fantastic source of regular recurring revenue, passing the $10 billion annually mark this year. What more could you want, right?
Well, I think we need to talk about one more fascinating bit of the Amazon puzzle — online advertising sales.
AMZN Stock Makes Strides in Advertising
When you think online advertising, you’re probably thinking Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) or Facebook (NASDAQ:FB). And true, those are the dominant players on the field — Google takes home about 37% of the market share and Facebook accounts for nearly 20%.
But Amazon is quietly creeping up on these behemoths. As eMarketer pointed out, the growth in its digital advertising division is strong, over 60% this year, and that part of the business should pass the $2 billion in revenue mark for 2018. That’s going to push its market share to about 2.7%.
But more interesting, eMarketer also posits that Amazon’s market share should expand to about 4.5% in just two years … pushing it past Microsoft and Verizon’s (NYSE:VZ) Oath platform and into third place overall. And that’s with Amazon being somewhat restrained in its throughput. As Monica Peart, eMarketer’s senior forecasting director, said, “So far, it’s been conservative in its ad load. It remains an open question as to when Amazon will take advantage of its significant reach and dominance in rich shopper data to ramp up the placement of ads in other areas.”
Now, $2 billion annually isn’t a massive mover for a company that is currently bringing in between $50 billion and $60 billion per quarter. But it’s the growth that’s fascinating. Even if it can’t take any market share from Google and Facebook, there’s still a lot of the pie left.
Anyway, back to the question at hand. Can AMZN take the title in 2019? They say third time’s the charm, and it seems unlikely that Amazon stock will have a bad year without the overall market also having trouble. I think the readers are onto something here.
Jessica Loder is an assistant editor at InvestorPlace.com. As of this writing, she did not hold a position in any of the aforementioned securities.