Amazon (NASDAQ:AMZN) stock is by no means “under-the-radar,” but it has been the subject of relatively fewer headlines lately. We have witnessed several of Amazon’s “Mag-7” peers touted for their greater AI growth potential, but strong AI catalysts (and several non-AI catalysts) are emerging.
The market recognizes Amazon’s improving prospects, reflected in its stock’s 77% increase in the past year. However, with these positives being far from being fully priced-in, don’t let this top tech opportunity slip away, as I’ll explain below.
AMZN Stock: AI Headwinds or AI Tail Winds? Go With the Latter
When it comes to the Mag-7 and AI, other names besides Amazon have dominated the spotlight. However, recent AI-related news has been positive.
Back in February, Amazon released a well-received quarterly earnings report. For the December quarter, Amazon’s revenue and earnings came in well ahead of sell side forecasts.
Amazon CEO Andy Jassy also provided upbeat commentary regarding the company’s current efforts to integrate generative AI technology into its AWS cloud computing platform.
Despite concerns that the rise of generative AI could be more of a headwind than a tail wind for AWS, and in turn, AMZN stock, management believes that gen AI will generate “tens of billions” in incremental revenue for the company down the road.
That’s not all. Other developments suggest that gen AI will help enhance the performance of Amazon’s business units beyond AWS. For instance, as InvestorPlace’s David Moadel recently discussed, the company continues to develop and roll out gen AI tools and features that stand to enhance its e-commerce platform.
While not a recent development, it’s all well worth noting that, for the past year, Amazon has been increasing its usage of AI technology to enhance the performance of its fast-growing, high-margin digital advertising business.
Major Non-AI Catalysts at Play as Well
AI may be poised to provide a shot in the arm in terms of growth and profitability across Amazon as a whole, but again, there are also major non-AI catalysts at play with AMZN stock as well. The most recent of these non-AI catalysts has to do with the company’s budding Amazon Pharmacy segment.
As InvestorPlace’s William White reported March 13, Amazon has entered a partnership with Eli Lilly (NYSE:LLY), through which it will support the pharma giant’s direct-to-consumer sales of its products, namely Zepbound, which has fast become one of the most popular weight loss drugs.
Admittedly, this deal alone may not be a needle mover for AMZN. However, success with this endeavor could convince additional names in big pharma to partner with Amazon for the distribution of other blockbuster drugs.
In short, it’s not hope and hype when Amazon bulls say that this company could disrupt the pharmacy industry.
In terms of other non-AI catalysts, while the company is no longer taking additional cost-cutting measures like layoffs, the positive impact of last year’s efficiency efforts (as also seen in last quarter’s results) could continue to boost the bottom line in the quarters ahead.
Bottom Line: Another ‘Magnificent’ Buy for Your Portfolio
The analyst community is well-aware of Amazon’s trajectory. According to sell side consensus, AMZN’s earnings could grow by around 43.5% this year.
In 2025, earnings could grow by an additional 29.5%. Further news and/or progress regarding generative AI may also help to boost confidence that Amazon’s earnings growth will continue to come in at an above-average pace.
Such growth will help to sustain continued strong returns for shares. Amazon’s entry into the Dow Jones Industrial Average last month may not have a major impact on index fund inflows, yet it could help bolster AMZN’s reputation as a top “buy and hold” blue-chip.
Taking all of this into account, the take-away is clear. AMZN stock is another “Magnificent” buy for your portfolio, so don’t sleep on it.
AMZN stock earns an A rating in Portfolio Grader.
On the date of publication, Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
