Amazon (NASDAQ:AMZN) stock remains a great long-term investment. It continues to outpace the broader market, a trend that has been ongoing for the last 18 months. Year to date, Amazon’s share price is up 20%, nearly double the 11% gain in the benchmark S&P 500 index.
Over the last 12 months, Amazon stock has gained 75%. While other megacap technology giants such as Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) have tumbled into the red this year, Amazon continues marching higher, fueled by growth and innovation.
AMZN Stock and AI
There have been some perceptions that Amazon is not an AI company, or at least running behind in the race to add AI features and monetize them.
Amazon is doing its best to dispel those inaccurate perceptions. Recently, the e-commerce giant announced it is investing an additional $2.75 billion in Anthropic, a privately held San Francisco-based startup company that’s widely viewed as a leader in AI.
It’s the second major investment that Amazon has made in Anthropic. In September 2023, the company invested $1.25 billion in the AI startup.
The $4 billion total that’s been allocated to Anthropic marks the biggest outside investment ever for Amazon, which is looking to gain an edge in the race to develop AI technologies.
Amazon maintains a minority stake in Anthropic and won’t have an Anthropic board seat. However, Amazon gets access to Anthropic’s AI technology, which has set industry benchmarks in areas such as reasoning and math.
Some view Anthropic’s AI models as the fastest and most powerful in the world. Amazon is already using AI to help customers with everything from ordering items on its e-commerce platform to writing product reviews.
Diversifying in Other Areas
Beyond AI, Amazon is branching out into many other areas and forming strategic partnerships where needed.
These include everything from securing the exclusive rights to an NFL playoff game for its streaming service this upcoming football season to adding robots and aerial drones to its delivery network to achieve efficiencies.
The company has become leaner and more nimble, cutting 20,000 employees and closing facilities since Covid-19.
One particular area where Amazon is pushing hard right now is in the market for prescription drugs.
Recently, Amazon struck a partnership with pharmaceutical giant Eli Lilly (NYSE:LLY) to help distribute its prescription drugs, notably its new weight loss treatment called Zepbound.
Eli Lilly will use Amazon Pharmacy to distribute Zepbound directly to people’s homes. It’s set to be a lucrative deal considering the massive demand for the weight loss drug.
The Eli Lilly partnership comes as Amazon is testing same-day prescription medication delivery. The experiment is in major urban centers such as New York City and Los Angeles ahead of what it hopes will be wider distribution in the coming months.
Prescriptions are purchased by consumers through Amazon’s online pharmacy service, which launched in 2020. Amazon Pharmacy enables consumers to order prescription drugs for home delivery, with free shipping for Prime members.
While Amazon is testing same-day prescription drug deliveries in New York and Los Angeles, the company plans to add more than a dozen other U.S. cities by year’s end.
Last autumn, Amazon began sending prescription medications via drones in parts of Texas.
Strong Financials & Dow Addition
While all the activity at Amazon shows the company is moving in exciting directions, it is also helping with its financial performance and Amazon stock.
For the final quarter of 2023, the company reported earnings per share of $1 compared to 80 cents that had been expected among analysts. Revenue totaled $170 billion versus $166.20 billion that was forecast.
Sales were up 14% from a year ago, and the profit of $1 was up 3,233% from only 3 cents a share a year earlier.
The strong earnings and consistent growth have helped Amazon stock become the newest component in the blue-chip Dow Jones Industrial Average.
In late February, AMZN stock replaced pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) in the Dow, a collection of 30 blue chip stocks that is supposed to represent the American economy.
The addition to the Dow 30 is good news for Amazon stock as it requires mutual funds and exchange-traded funds that track the index to buy up the company’s shares.
Buy AMZN Stock
Amazon has so much going for it right now. The company is making big moves in AI and pharmaceuticals, successfully growing its streaming service, leaning out its operations, and has seen its stock added to the elite Dow 30 index.
The company’s financial performance remains strong and its shares are outperforming the broader market even as other well-known tech names falter. With so many positives working in its favor, Amazon stock is a buy.
On the date of publication, Joel Baglole held long positions in AAPL and LLY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
