Shares of technology giant Amazon (NASDAQ:AMZN) have been red-hot all year long. Until recently. Broader weakness in tech stocks, coupled with macroeconomic concerns of a resurgence of Covid-19 cases nationwide, has led to AMZN stock sliding for five straight days and dropping into correction territory for the first time since March.

It’s time to start thinking about buying the dip in AMZN stock.

The reality is that Amazon stock just got a bit too hot. Now, it’s cooling off. This cool-off period will end soon and at levels not to far below where shares currently trade. Once it does, the stock will get back to its winning ways.

This “buy the dip” thesis is supported by a tri-fecta of favorable fundamentals, optics, and technicals.

Here’s a deeper look.

The Fundamentals Look Good

Zooming out, the big picture fundamentals supporting the Amazon growth narrative are as good as they’ve ever been.

The Covid-19 pandemic has permanently accelerated e-commerce adoption globally, and Amazon.com continues to lean into its subscription program, robust logistics, and the platform’s network effects in order to sustain leadership in this market. Without a doubt, Amazon’s e-retail sales will continue to surge over the next several years.

Meanwhile, the Covid-19 pandemic has also permanently accelerated remote work adoption globally. As the future of work turns into a hybrid model of in-office and remote work, demand for cloud infrastructure services will soar. Amazon Web Services remains king in that market. Consequently, AWS sales will continue to power higher for a lot longer.

On the physical retail front, Amazon continues to test and improve its self checkout technology. As this technology improves over time, Amazon will more broadly integrate it into its own line of physical Amazon Go stores. To that end, Amazon reasonably projects to grow its share of the physical retail market over the next few years, too. An acquisition is also likely on this front.

Amazon’s digital ad business continues to ramp up at a time when engagement is increasingly pivoting into the digital channel, and ad dollars continue to make their way onto digital platforms. There’s also Twitch, Amazon’s leading video game streaming platform, which has a bright future as eSports gain mainstream traction. And there’s Amazon’s recent acquisition of Zoox, which paves the path for Amazon to build out a self-driving logistics business that could be huge one day.

All in all, the fundamentals underlying AMZN stock remain robust. Indeed, they appear more robust today than ever before.

Attractive Valuation

Given these robust fundamentals, my modeling suggests that there is a visible pathway for Amazon to hit $1+ trillion in sales within the next decade, and for earnings per share to wind up around $250 by 2030.

Based on a 25-times forward earnings multiple, that implies a 2029 price target for Amazon stock of $6,250.

Using a recommended 8.5% cost of equity discount rate — which is lowered to account for today’s low-rate environment — that implies a 2020 price target for AMZN stock of $3,000.

Thus, on dips below $3,000, shares look attractively undervalued.

Optics Will Remain Strong

The optics surrounding Amazon stock will remain strong, and therefore supportive of a rebound rally.

Spikes in Covid-19 cases across the country have forced state and local authorities to roll back reopening measures and re-close certain physical operations. This has sparked a slowdown in physical retail sales growth, and an acceleration in online retail sales growth to its highest level since the pandemic emerged.

Obviously, an acceleration in e-retail sales is a good thing for Amazon.

At the same time, as the pandemic has dragged on, more companies have come to see work-from-home as a permanent, or at least long-lasting, change. Increased belief that remote work is here to stay will promote increased investment into remote work technologies, which will create increased demand for cloud infrastructure and AWS.

Meanwhile, the video game market remains red hot, and digital ad spending is recovering. All in all, the optics surrounding AMZN stock remain favorable. It’s tough to see prolonged and deep selling in AMZN stock persisting with such favorable optics.

Technical Support Will Show Up

Amazon stock will start to find technical support soon.

The stock has dipped into correction territory. Historically speaking, shallow sell-offs in AMZN stock end with the stock bottoming out around 10% down.

Given favorable fundamentals and optics, it’s quite likely that this sell-off will prove shallow, too. If so, history says the stock should turn around soon.

Moreover, the 20-day moving average currently sits around $2,900. That moving average should provide additional technical support in this sell-off.

Bottom Line on AMZN Stock

Amazon stock is a long-term winner that’s going through some near-term weakness.

The fundamentals, optics, and technicals all imply that this stretch of near-term weakness is coming to a close. Buy the dip and hold for the long haul.