Amazon (NASDAQ:AMZN) stock is still a worthy investment in 2024 despite the company’s rich valuation. While they face competition in e-commerce and artificial intelligence, Amazon’s soaring earnings and long term growth prospects are second to none.
Their recent cost-cutting measures have fueled impressive growth in the last year and it’s expected to continue. Analysts are projecting EPS to surge more than 30% YOY in FY24, and their cloud arm remains a leader in the AI race. Whether you are looking for a retail giant or a tech powerhouse, Amazon allows investors to get the best of both worlds. This makes them one of the most compelling stocks to buy in 2024.
Soaring Earnings and Profitability
Amazon’s recent cost-cutting measures in 2023 has yielded impressive results. The company’s earnings and FCF have skyrocketed in the past year. In FY23, AMZN stock net income was $30.4 billion or $2.90 per share. This improved from a net loss of $2.7 billion or $-0.27 per share in FY 2022.
Additionally, Amazon saw record FCF of $36.8 billion, with cost- cutting and investments in generative AI being the primary driver. This financial strength and turnaround is key to the company building on momentum in the 2024 fiscal year.
Looking at Amazon’s latest quarterly financial results, analysts are highlighting a significant surge in earnings per share (EPS). The current estimates project EPS to climb more than 30% in the 2024 fiscal year. This is certainly a major catalyst for growth, and Amazon continues to see diversified growth across all its businesses.
AWS Powered by Artificial Intelligence
Amazon Web Services (AWS), the company’s major cloud computing arm, will continue to be a major driver of growth. AWS is not only the most dominant player in the cloud infrastructure market, but is also at the forefront of the artificial intelligence revolution.
Training AI models requires massive computing power and AWS infrastructure is best suited to meet these demands. Their generative AI platform, Amazon Bedrock, is one of the most comprehensive platforms to build and scale generative AI models efficiently and cost-effectively.
Amazon is heavily investing CAPEX to meet the growing needs of the marketplace. Their custom designed chips like Tranium and Inferentia specifically cater to the unique needs of AI workloads. The EC2 deep learning chip will be a game changer, and has over 100B+ parameters and is set to drive down cost significantly. This focus on AI is crucial, as the AI enterprise software market is expected to grow rapidly over the next decade.
AMZN Stock: Continued Dominance in E-Commerce and Beyond
Despite facing increased competition, Amazon remains the undisputed leader in E-commerce. In the 2023 fiscal year, the company saw record fast delivery and shipped more than 7 billion units for same day or next day delivery. The company is constantly innovating and expanding its offerings through Amazon Prime.
Moreover, Amazon does not limit itself to cloud computing, e-commerce, and AI. The company has successfully ventured into healthcare and advertising. Their advertising revenue grew 27% YOY to $14.65 billion in Q4 2023, making their ad services business a serious rival to Meta and Google. These strategic expansions and leadership in AI further solidify Amazon’s position as a leading global technology giant.
On the date of publication, Terel Miles 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.
