After coming off a strong year, Amazon (NASDAQ:AMZN) stock is still a screaming buy in 2024. Last year was the year of artificial intelligence, and this year will be no different. This is the most important computer technology since the birth of the internet, and PwC estimates that AI could contribute more than $15 trillion to the global economy by 2030. 

There were certainly a lot of companies that rose more than they should have last year, but Amazon was definitely not one of them. Apart from implementing cost-cutting measures, Amazon has crafted a robust generative AI strategy. This is truly only the beginning, making AMZN stock a screaming buy in 2024!

Gen AI and AMZN Stock

Amazon is a clear-cut winner in the AI revolution. CEO, Andy Jassy has been crafting a robust generative AI strategy and cost-cutting measures continue to spur growth.

The company is about to close off a strong 2023 fiscal year, after coming off a year of slow growth in 2022. What many investors seem to forget is that Amazon’s AWS platform will become a cornerstone for all things artificial intelligence.

AWS customers will be able to run LLMs and generative AI models through Amazon Bedrock. 

They will also be able to leverage Amazon CodeWhisperer, a generative AI powered assistant tool that gives you conversational AI suggestions. However, what I believe to be the most undervalued asset is Amazon’s custom Inferentia chips.

Amazon EC2 is a deep learning inference chip that is custom built for high performance machine learning inferences. AC2 is the second generation of AWS Inferentia chips that can deliver up to 4x higher throughput and up to 10x lower latency. Some of their customers include Airbnb, Snapchat, Dataminr, and Autodesk. 

They are also not shying away from industry competition after announcing a strategic collaboration with generative AI startup, Anthropic. Amazon agreed to invest up to $4 billion into the company to leverage AWS Tranium and Inferentia chips to build, train and deploy advanced foundational models.

Cost-cutting Measures

Profitability has certainly been one of the main issues holding AMZN stock back. Before restructuring efforts had occurred, Amazon was losing a ton of money. Some would blame it on the economy, while others would blame it on the management. 

But the good news is that the Amazon bears cannot blame any of those two scenarios now. Not only is the economy set to rebound, management is making strategic moves to accelerate revenue growth and profitability. 

It appears that Andy Jassy was the right man for the job after his long tenure as CEO of Amazon Web Services from 2003-2021. At the beginning of 2023, he made a bold move to implement cost-cutting measures to get Amazon back on the right track. This included cutting over 27,000 jobs. 

This move has not only boosted operating income, but FCF has also swung from negative to positive. In Q3 2023, FCF swelled to $21.4 billion compared to an outflow of $19.7 billion. Operating income increased to $11.2 billion largely driven by AWS. Things look to be trending in the right direction, and 2024 will likely be another year of sustained growth.

World’s Largest Company

AMZN stock is truly a once in a generation type of business. Their strong moat has positioned them to become one of the world’s most valuable companies. 

Similarly, it has catapulted them to the 2nd largest company in the world by revenue. However, that is going to change soon simply because of the market opportunities in artificial intelligence.

Analyst’s project Amazon to grow top line revenue by 11% in the 2023 fiscal year. Followed by 11% YOY growth in 2024. When considering the company’s cost-cutting measures, which have yet to fully materialize, revenue growth and operating income could come in well above guided estimates in FY24. It would not be surprising to see Amazon surpass Walmart in revenue by mid decade.  

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.