3 Reasons to Buy Amazon Stock Like There’s No Tomorrow

Amazon (AMZN -0.27%) it’s the world’s fourth-largest company by market capitalization, but it’s a classic case of winners keeping on winning. Did you miss your chance to buy it before the millionaires hit? You can still benefit from owning Amazon stock. Here are three reasons to buy it today.

1. Opportunities in Artificial Intelligence (AI)

Amazon’s foray into generative AI has created the biggest hype for Amazon stock in two years. However, the reality is more than the hype. Customers are using Amazon’s AI tools and finding value in them. As Amazon invests in upgrades and new features, it should be able to maintain its dominant position in cloud computing and capture more market share.

Amazon Web Services (AWS) sales growth rose to 18.8% year over year in the second quarter. CEO Andy Jassy attributed that to three factors: customers have completed cost optimization efforts that began with high inflation, are looking for ways to modernize their infrastructures, and are excited about AI.

He has said several times that 85% of the company’s infrastructure spending is still outside the cloud, but that will change. The flip is starting to happen, and that could send a flood of business to Amazon. AWS is the global leader in cloud computing with a 31% market share. It is preparing to stay ahead of the competition.

Based on customer feedback, management believes they are looking for flexibility and choice in cloud spending. It is working to develop a broad base of services to meet any type of generative AI demand, from the most customizable for developers to plug-and-play options for small businesses.

Since it’s Amazon, it also competes on price. So while it works with Nvidiaalso develops cheaper chips for customers looking for affordability. Jassy said, “This team is cooking, but we’re nowhere near done adding capabilities for our customer interface.”

2. More than AI

AI may represent the biggest growth opportunities for Amazon right now, as well as a new direction. But he is investing in his other businesses and producing results.

Advertising has been Amazon’s fastest-growing segment for some time, with revenue up 20% year-over-year in the second quarter, or $2 billion. It already provides unparalleled exposure to advertisers targeting Amazon customers through sponsored ads on its e-commerce platform, and its new ad-supported Prime streaming tier adds new opportunities for advertisers and Amazon.

E-commerce continues to show progress, with unit growth outpacing sales growth as consumers trade down prices. They rely on Amazon to offer a wide range of options and prices with fast and free shipping. Jassy said same-day or next-day shipping rates are at record highs, creating a greater reliance on Amazon for essentials.

It just expanded its Prime program for Amazon Fresh shoppers to include 10 percent off select private label products and launched a new no-frills brand called Amazon Saver, with many items sold for under $5.

3. A price you may not see again anytime soon

The market didn’t take kindly to Amazon’s guidance, which came in slightly below third-quarter revenue expectations from its second-quarter report; Analysts expect $157.14 billion, while Amazon provided an average point of $156.25.

Amazon’s stock fell after the report, hitting its lowest price-to-earnings (P/E) ratio in a decade. Since then it has already gone up because many investors recognized it as a bargain. At the current price, it is trading at 44 times trailing 12-month earnings. That’s still a pretty good deal for Amazon stock, which typically trades at a much higher valuation.

There are plenty of other reasons to be bullish on Amazon’s stock, such as tailwinds — if interest rates are cut next week — and its expanding healthcare business, and now looks like a great time to buy .