Are you losing sleep over the wave of tech layoffs? Is downsizing getting you down? I encourage you to chill out and stay in the trade with Amazon (NASDAQ:AMZN) shares. A thorough Amazon stock analysis leads to one conclusion: the company will be just fine, even if some workers have to find employment elsewhere.
I do want investors to be aware of Amazon’s layoffs, as this is relevant information. At the same time, all news items should be put into perspective. Even as Amazon slims down in certain areas, the company is also constantly expanding its global tech-market presence.
New Layoffs: What AMZN Stock Investors Need to Know
Here’s a breakdown of some recent rounds of layoffs in Amazon’s various segments. First of all, Amazon disclosed its plans to eliminate several hundred jobs at the company’s Prime Video and MGM Studios divisions.
Is this a red flag for Amazon? Not really, as Wedbush analysts predicted Amazon is “on pace to generate $46.5 billion of advertising revenue” this year. Consequently, it’s fair to conclude that Amazon doesn’t rely very much on its revenue from Prime Video and MGM Studios.
Also, Amazon’s video-game livestreaming platform, Twitch, will lay off more than 500 workers. Again, this shouldn’t be a major concern for Amazon stock investors. Twitch has been unprofitable since Amazon acquired it in 2014, so it’s not a bad business move for Amazon to eliminate jobs at Twitch.
More recently, Amazon disclosed its plans to cut some jobs at its Buy with Prime division. However, this shouldn’t set off any alarm bells. After all, Amazon is only laying off slightly more than 30 workers in that division. That’s unfortunate for those workers, but it’s not a monumental event in the grand scheme of the business.
Amazon’s Growing Ambitions With the Cloud
Don’t let the aforementioned layoffs cloud your perception of Amazon’s progress in the cloud-computing market. Truly, Amazon Web Services (AWS) is a redoubtable competitor among U.S. cloud businesses.
It’s a business that’s only getting bigger, as AWS reportedly plans to “establish multiple data center units in two … industrial parks” in Mississippi. This is projected to create 1,000 or more new jobs in Mississippi, so even if Amazon is laying workers off now, the company also expects to hire plenty of people.
Moreover, Amazon’s cloud-computing ambitions aren’t limited to U.S. borders. Reportedly, AWS plans to invest 2.3 trillion yen, or around $15 billion, to expand its cloud-computing infrastructure in Japan.
AWS already has cloud operations in Tokyo and Osaka in Japan, as well as in Beijing and Hong Kong, China. Plus, AWS previously committed to investing $12.7 billion in India by 2030.
Hence, Amazon’s cloud-market footprint isn’t only expanding in North America. By holding Amazon stock for the long term, you’re effectively an international investor whether you know it or not.
Amazon Stock Analysis: Layoffs Shouldn’t Pose a Problem
Big Tech’s layoffs could continue for a while, but this shouldn’t be a deal-breaker for prospective AMZN investors. Bear in mind, Amazon is only slimming down low-conviction areas in order to build up high-conviction areas.
Besides, Amazon is a premier player in multiple lucrative markets, not only including e-commerce but also in the cloud. All in all, my Amazon stock analysis looks extremely favorable. So, relax and put some Amazon shares in your portfolio for a confident long-term position.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
