With theDowJones Industrial Average (^DJI -0.13%) down over 1,200 points at the time of this writing and the Nasdaq Stock Market down 5.6% in one day, it can be intimidating to think about stocks in general, let alone put new money to work right now. But if you don't need the money right away, times like these are also exciting because they represent buying opportunities to take ownership of some of the stock market's most dynamic names at a discounted level.
A litmus test
One such name that fits the bill is Amazon (AMZN -1.68%).
I often think of Motley Fool founder and CEO Tom Gardner's litmus test that asks, "If a company were to disappear, would people notice it?" Few companies today pass that test more resoundingly than Amazon.
Whether it's reordering laundry detergent when you run out, buying a gift for Mother's Day because you need it fast and you can be reasonably confident that it will show up in two days, or even watching a Major League Baseball game or a children's cartoon, many of us interact with Amazon on a daily basis.
Despite this ubiquity, after an 8% drop today, Amazon is now down 25% over the past month, and it is down almost 40% from its 52-week high. Despite the sell-off, Amazon shareholders have plenty of catalysts to look forward to. The upcoming 20-for-1 stock split in June does not affect the actual value of Amazon, but it will make the stock more accessible to a broader pool of investors, which should spur volume and support the share price.
Image source: Getty Images.
While some investors are less enthusiastic about Amazon's core e-commerce business because they view it as a capital-intensive and lower-margin operation, it is also a fortress that the company has built with high barriers to entry. There are very few companies that would be able to compete with Amazon on this front or replicate the massive infrastructure it has built, so this moat should be durable for years to come.
Amazon Web Services (AWS), the company's high-margin cloud services business that many investors view as the crown jewel of the company, grew revenue by 37% to $18.44 billion in the first quarter of this year compared to Q1 2021, which is remarkable for a business of this size. Many investors don't realize that Amazon also has a growing advertising business that doesn't get nearly enough attention -- ad sales grew 25% year over year to $7.88 billion in Q1, which is a run rate of over $30 billion in revenue for the year. Advertising on Amazon is a particularly attractive position to advertisers because it is a shopping-native platform. Consumers are already coming there with the intent of buying something, so the advertisers are closer to the point of sale.
The company also just announced some exciting news with the launch of Buy With Prime, which will extend the benefits of Amazon Prime to other websites. This is a way that Amazon can leverage the strength of its logistics network and extend its reach with consumers even further. I think this will be a win-win for Amazon and other merchants. I know from my own experience that I would be much more likely to buy something from a different website if I could do so with the same ease that I can on Amazon Prime, and this will be a compelling perk for many consumers.
Is Amazon a buy?
While seeing a screen full of red tickers in one's portfolio never feels good at the moment, these are opportunities to build positions in some of the world's best companies at substantial discounts.
Amazon has created tremendous value for shareholders over the years, with a gain of 940% over the past decade. The long-term trend is up and to the right, and the current sell-off is a speed bump in the road to growing returns that is inevitable in the stock market over time. Amazon is chugging along with its e-commerce and logistics business, growing revenue in its advertising segments, rolling out promising features like Buy With Prime, and it still has the catalyst of the upcoming stock split ahead.
Amazon looks like a buy at these levels, and I am getting ready to add it to my portfolio.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Michael Byrne has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
FAQs
The highest analyst price target is $230.00 ,the lowest forecast is $198.00. The average price target represents 19.85% Increase from the current price of $177.23. What do analysts say about Amazon? Amazon's analyst rating consensus is a Strong Buy.
What will 1 share of Amazon stock be worth in 10 years? ›
Analysts at Coin Price Forecast do offer a 2034 projection for Amazon stock, estimating a 10-year price increase of 276%, to $672 per share.
What is Amazon's target price in 2024? ›
Its Street-high target price of $230 implies an upside of 27.2% over the next 12 months. Analysts are overwhelmingly bullish on Amazon, and multiple brokerages listed it as a top pick for 2024. It has a consensus rating of “Strong Buy,” and is the highest-rated stock among the Magnificent 7.
What is the prediction for Amazon stock? ›
Amazon Stock Forecast
The 46 analysts with 12-month price forecasts for Amazon stock have an average target of 190.17, with a low estimate of 123 and a high estimate of 235. The average target predicts an increase of 5.92% from the current stock price of 179.54.
Is Amazon a good stock to hold forever? ›
Amazon is one of the top 10 best stocks to buy now because it has a leading position in two critical industries: e-commerce and cloud computing. The company is diversifying its business beyond those two segments. The stock can continue to rise due to advertising, video streaming and other opportunities.
How much will Amazon be worth in 2025? ›
Long-Term Amazon Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2025 | $ 229.12 | 28.45% |
| 2026 | $ 294.31 | 64.99% |
| 2027 | $ 378.04 | 111.94% |
| 2028 | $ 485.60 | 172.23% |
2 more rowsThose gains translate to a 23.2% compound annual growth rate for Amazon compared to a 6.2% CAGR for the S&P 500 in that time. As a result, $10,000 in AMZN stock purchased 20 years ago would now be worth $645,262.
What will $10,000 be worth in 20 years? ›
The table below shows the present value (PV) of $10,000 in 20 years for interest rates from 2% to 30%. As you will see, the future value of $10,000 over 20 years can range from $14,859.47 to $1,900,496.38.
How much would I have if I invested $1000 in Amazon in 1997? ›
If you had invested $1,000 during Amazon's IPO in May 1997, your investment would be worth $1,341,000 as of August 31, according to CNBC calculations. That's better than the so-called FAANG stocks, plus Ebay – which debuted in that same period.
Will Amazon bounce back? ›
Amazon Stock: Wall Street Projections For 2024
After posting a loss in 2022, Amazon's earnings bounced back in a big way last year. Now, Wall Street analysts are expecting further earnings growth for 2024.
According to the latest long-term forecast, Amazon price will hit $200 by the end of 2024 and then $250 by the middle of 2025. Amazon will rise to $300 within the year of 2026, $350 in 2027, $400 in 2028, $500 in 2029 and $600 in 2032.
Is Amazon a good stock to invest in 2024? ›
Amazon stock (NASDAQ:AMZN) stock remains one of the top tech stocks to buy in 2024. The company remains a leader in the technology and retail landscape, and has a number of tailwinds to drive growth in the 2024 fiscal year.
Who owns the most shares of Amazon? ›
Jeffrey Bezos owns the most shares of Amazon (AMZN). The ownership structure can impact the company's decision making, as large institutional investors may exert influence on the company's management and can also affect the company's stock price with their buying and selling patterns.
Who is the largest shareholder of Amazon? ›
Is Amazon a buy or sell today? ›
Amazon.com, Inc. - Buy. Zacks' proprietary data indicates that Amazon.com, Inc. is currently rated as a Zacks Rank 2 and we are expecting an above average return from the AMZN shares relative to the market in the next few months.
Will Amazon stock go up long term? ›
Latest Amazon Stock Forecasts for 2024, 2025 & 2030
The average one-year Amazon stock forecast 2024/2025, according to MarketBeat, is for the price to reach $202.80, with the highest projection being $235 and the lowest estimate standing at $140.
Will Amazon shares grow? ›
The e-commerce and cloud giant could continue to outperform many of its industry peers. Amazon's (AMZN -1.64%) stock has risen nearly 80% over the past 12 months. The e-commerce and cloud leader grappled with a post-pandemic slowdown and tough macro headwinds in 2022, but its core businesses have been stabilizing.
Is Amazon best growth stock? ›
As a final thought, JPMorgan Chase analysts selected Amazon as their "best idea" among internet stocks in 2024. More broadly, the stock carries a consensus rating of "buy" among Wall Street analysts, and its median one-year price target of $215 per share implies 20% upside from its current price of $179 per share.
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