The company's current issues will do little to disrupt its long-term prospects.
In 2020, business was booming for e-commerce companies because of the pandemic and related government-imposed lockdown orders. It's with this momentum that Amazon (AMZN 0.75%), one of the largest players in the industry, started 2021. However, the tech giant lagged the market last year, and several factors likely contributed to Amazon's underperformance in 2021.
First, investors largely shifted away from the so-called "pandemic stocks," and many of these companies had a terrible year as a result. Second, Amazon's iconic founder, Jeff Bezos, stepped down from his role as the CEO of the company in the third quarter, leaving his deputy Andy Jassy in charge.Will these factors continue to weigh on Amazon's stock performance, or can the company get back to its market-beating ways?
Amazon's shares currently trade at $3,251.08 apiece. Let's see whether the company's stock can rise roughly 23% this year to hit the $4,000 mark.
AMZN data by YCharts
Near-term headwinds
While the pandemic brought forth increased adoption of e-commerce, from which Amazon benefited, the outbreak also came with several issues for the company's consumer business. As it reported in its latest quarterly update, the tech giant is currently facing "labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs."
The company also doubled the size of its fulfillment network since the pandemic started to deal with capacity constraint issues. Amazon largely insulated its customers from these higher costs, which means it is taking them on itself. The company said it would incur "several billion in additional costs" due to the issues it is facing,which may harm the bottom line, at least in the short run.
Long-term opportunities
Amazon has always been laser-focused on pleasing its customers, and it is showing this commitment once again. The money Amazon is spending to deal with its current issues will help keep its retail business efficient. Getting items to customers promptly is what matters in the long run. But then there's also the company's cloud computing unit, Amazon Web Services (AWS), to consider.
Image source: Getty Images.
AWS continues to contribute substantially to Amazon's overall business performance. The company recorded net sales of $110.8 billion in the third quarter, 15% higher than the year-ago period. Meanwhile, operating income and net income both dropped for the company. Amazon's operating income decreased by 21.7% to $4.9 billion, while net income declined to $3.2 billion, 50.2% lower than the year-ago period.
How did AWS perform? Net sales from the segment soared by 38.9% to $16.1 billion -- a much higher growth rate than Amazon's overall business. Furthermore, AWS' operating income increased by 38.1% to $4.9 billion while Amazon's international segment reported an operating loss. The North America division only saw a comparatively modest operating profit of $880 million.
According to Statista, Amazon held a 32% slice of the cloud computing market in the third quarter; its closest peer came in at 21%. And while increased competition in this field is a potential headwind to keep in mind, Amazon generates loads of cash, and we can expect the company to continue investing heavily in this business. Amazon ended the third quarter with $30.2 billion in cash and cash equivalents,which remained more or less flat compared to the year-ago period.
According to some estimates, the cloud computing market will expand at a compound annual growth rate of 17.9% through 2028. That's good news for Amazon -- and its shareholders. Expect the tech giant to continue to benefit from this tailwind.
How will the market react?
Despite the near-term challenges, Amazon is still ideally positioned for long-term growth. That's what matters most: After all, the market is supposed to be forward-looking. That's why, after it was a laggard last year, I expect the company to beat the broader market in 2022. Analysts see Amazon growing its revenue by 17.7% this year.
Furthermore, the company's analyst consensus price target stands at $4,104.88, or 26.3% above its current price (as of this writing). I see Amazon exceeding this price target within the next 12 months. But even if it doesn't, investors should remain focused on the company's excellent long-term prospects.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Prosper Junior Bakiny owns Amazon. The Motley Fool owns and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.
FAQs
That's why, after it was a laggard last year, I expect the company to beat the broader market in 2022. Analysts see Amazon growing its revenue by 17.7% this year. Furthermore, the company's analyst consensus price target stands at $4,104.88, or 26.3% above its current price (as of this writing).
Does Motley Fool recommend Amazon? ›
The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
What will Amazon stock be in 5 years? ›
The Future of Amazon
Of the 47 analysts who recommended Amazon in June, 44 rated it a buy or a strong buy. Forecasters predict that Amazon will reach $200 per share a year from now and will continue to rise to $250 per share at the end of 2026.
What is Amazon's prediction for 2024? ›
Amazon's revenue, meanwhile, is expected to grow 11% to $638.7 billion in 2024. Sales grew 11.8% in 2023 and 9.4% in 2022.
How high can Amazon stock go up? ›
Average Price Target
Based on 42 Wall Street analysts offering 12 month price targets for Amazon in the last 3 months. The average price target is $221.48 with a high forecast of $246.00 and a low forecast of $200.00. The average price target represents a 21.15% change from the last price of $182.81.
What will Amazon stock be worth in 2025? ›
Long-Term Amazon Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2025 | $ 242.87 | 28.45% |
| 2026 | $ 311.97 | 64.99% |
| 2027 | $ 400.73 | 111.94% |
| 2028 | $ 514.74 | 172.23% |
2 more rowsThe Motley Fool has positions in and recommends Amazon, JPMorgan Chase, Shopify, and Walmart.
What do experts say about Amazon stock? ›
As IBD noted, of the 63 Amazon analysts following Amazon, 95% hold a Buy rating on the stock, according to FactSet. On average, the analysts have a 12-month price target of $212.45 for Amazon, which represents a 14% upside to its current price of about $186.
Is Amazon a long-term stock? ›
This massive technology giant may have a leaner and more profitable future. With shares up by a whopping 78% over the last 12 months, Amazon (AMZN -0.09%) stock is finally bouncing back from the slump it experienced in 2022 -- with profitability returning to historic highs.
How much will Amazon stock be worth in 2040? ›
Amazon price prediction key takeaways:
| 2025 | 2040 |
|---|
| AMZN stock forecast (5% yearly growth) | $184 | $401 |
| AMZN stock forecast (10% yearly growth) | $193 | $885 |
| AMZN stock forecast (S&P 500 historical 11.13% ROI) | $194 | $1,052 |
| AMZN stock forecast (QTEC historical 17.1% ROI) | $202 | $1,940 |
Mar 20, 2024
Amazon stock price stood at $183.66
According to the latest long-term forecast, Amazon price will hit $200 by the middle of 2025 and then $250 by the end of 2026. Amazon will rise to $300 within the year of 2027, $350 in 2028, $400 in 2029, $450 in 2030 and $500 in 2032.
What will Amazon be worth in 2030? ›
If Amazon maintains its current valuations, matches analysts' expectations, and grows its EPS at a CAGR of 20% from 2025 to 2030, its market cap would reach $5.5 trillion by the final year. If Apple does the same thing and grows its EPS at a CAGR of 10% from fiscal 2026 to fiscal 2030, it would be worth $5.2 trillion.
Will Amazon stock double? ›
Amazon's earnings increased by 14% year over year in the fourth quarter of 2023. If the company can keep up this growth rate, its stock has a good shot of doubling or more by 2030.
How much is Amazon stock in February 2024? ›
The closing price for Amazon (AMZN) in February 2024 was $176.76, on February 29. It was up 13.4% for the month. The latest price is $184.26.
Can Amazon hit $1000? ›
Future Outlook for Amazon Stock
It took seven and a half years for Amazon to reach $1,000 from $100 and it's very possible that it could hit $10,000 between 2023 and 2025. Amazon's potential to grow could continue over time.
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.
Will Amazon stock reach $200? ›
The Future of Amazon
Of the 47 analysts who recommended Amazon in June, 44 rated it a buy or a strong buy. Forecasters predict that Amazon will reach $200 per share a year from now and will continue to rise to $250 per share at the end of 2026.
What is the highest Amazon stock has ever been? ›
The all-time high Amazon stock closing price was 189.50 on May 09, 2024. The Amazon 52-week high stock price is 191.70, which is 1.4% above the current share price. The Amazon 52-week low stock price is 118.35, which is 37.4% below the current share price. The average Amazon stock price for the last 52 weeks is 154.86.
What is Amazon's projection for 2024? ›
Amazon has a mean target price of $202.49, which is 12% higher than yesterday's closing prices. 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.
Is Amazon stock a good buy right now? ›
Amazon stock is reasonably valued
Wall Street analysts expect Amazon's earnings per share (EPS) to grow at an average annual rate of 28.2% over the next five years. The company's shares are currently priced at 37.9 times its projected forward earnings.
The Motley Fool is absolutely a legitimate investment research service company, not a scam. Here's a summary of the key evidence: Long track record: 28 years of operations with over 300 employees. Transparency: Clearly documents past recommendations and performance.
Is Motley Fool or Morningstar better? ›
If you're looking for stock picks, choose The Motley Fool. I cover its flagship service in detail in this Motley Fool Stock Advisor Review. If you're looking for objective analysis and ratings on ETFs and mutual funds, choose Morningstar.
Is Amazon stock high risk? ›
But, with such great size, comes a set of unique risks. The biggest risks of investing in Amazon.com, Inc. (AMZN) stock are increasing competition, profit potential uncertainty, revenue growth uncertainty, speculative valuation and share price volatility.
Does Motley Fool recommend options? ›
The Motley Fool provides monthly recommendations for options trades, as well as detailed guidance on how you should play that trade. This is what makes Motley Fool Options more robust than some other similar offerings on the market. Income Strategies: You can boost returns by leveraging options for income generation.
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