Amazon has materials that will continue to grow for a while.
After reaching the lowest in years of around $84 in early 2023, Amazon‘s (NASDAQ: AMZN) The stock has more than doubled to $200 (at the time of this writing), thanks to financial improvements.
Investors may wonder if a company is pushing forward tailwinds such as artificial intelligence (AI) or facing headwinds such as slowing down e-commerce.
Let’s take a closer look.
How did Amazon perform in 2024?
First, there is a review of Amazon’s recent performances focusing on performance in 2024. Overall, it was a solid year for a number of reasons.
Amazon has increased revenue by 11% to $638 billion thanks to growth in all three major segments. North America rose 10%, International rose 9%, and Amazon Web Services (AWS) rose 19%. The 11% revenue growth rate is not unusually high, but it remains surprising given the size of Amazon operating it.
Furthermore, while its topline growth was strong, the highlight of Amazon’s performance in 2024 was a significant improvement in its revenue. Operating income rose from $36.9 billion to $68.6 billion, 86%, due to increased profits in all segments. The rapid expansion of margins demonstrates the giant’s strong execution ability and sales leverage benefits in managing its costs.
Operationally, Amazon continues to improve delivery speeds, delivering over 65% more to Prime members on the same day or overnight than the fourth quarter of 2023. They also launched Amazon Haul, the new, ultra-priced shopping service in the US, to compete with low-cost players such as Temu and Shein.
Similarly, in the Cloud Computing Business (AWS), technology companies have made good progress in 2024, including introducing a new Trainium2 AI chip, establishing a foundational model for Amazon Nova, and creating new models and features that offer flexibility and cost savings with Amazon Bedrock. All of these innovations will help position the company in the ongoing AI race.
In other words, despite its size, the tech giant is still well running to please its users and maintain its share in the major markets.
What is Amazon’s outlook for the next few years?
Amazon may have become famous thanks to the success of its e-commerce business, but the most important growth driver in the coming years could come from other segments.
The biggest winner is probably AWS. This rides megatrends like advances in AI and the ongoing migration to the cloud. For example, the global AI market is expected to increase from $294 billion in 2024 to $1.772 billion by 2032. This is a combined average growth rate of 29%. As the world’s most important cloud computing player with a market share of 30%, AWS is prepared to benefit from this one generation trend.
Another business that acquires traction (which could accelerate further in the coming years) is Amazon’s advertising business. Advertising businesses, centered around Prime Video and Amazon Search, generated $14 billion in revenue in the first quarter of 2025, up 18% year-on-year. This segment grew even faster than AWS (up 17% in the same quarter). Like AWS, advertising is a marginal business and can contribute to the giant’s margin over time.
Unlike the previous two businesses, the e-commerce segment was able to see mixed performance over the next few years. For a positive purpose, Amazon can take advantage of large scale to gain market share from traditional brick and mortar shopping and expand in emerging markets like India. The downside is that we must address the uncertainty of tariffs and emerging competitors such as Temu and Shein. Therefore, while Amazon is still positioned favorably to grow its e-commerce business, the e-commerce outlook is not as simple as the AWS and advertising business outlook.
Still, while leads in different business segments on Amazon may differ, it is essential to emphasize that the company has an extraordinary culture centered around the “day 1” mentality. This mentality focuses on customer obsessions, embracing new trends, eschewing the willingness to experiment and fail, and bureaucracy.
As long as the company can maintain this culture, given its already vast size, it is well positioned to continue growing for the next few years, even though it is slow.
Are Amazon stocks cheap?
This is another factor investors should consider before moving to Amazon stocks. Previously related stock valuations. Here, let’s use Price-to-Sales (P/S) as a proxy.
Amazon’s P/S ratio has ranged from 1.7 to 4.6 times over the past five years. At the time of writing, it is 3.3 times the middle of that range.
Current ratings suggest that Amazon stocks today are not a bargain today, but are not overpriceeded compared to past ratings.
What it means for investors
Amazon has had strong results in 2024, highlighting the strength of its execution ability.
AWS and Advertising – High-margin segments are supported by trends such as AI adoption, driving future growth. While e-commerce faces mixed prospects, Amazon’s day one culture could remain competitive in the near future.
So, stocks are not the cry of today, but it’s not a selling. While existing investors need to hold stocks, investors with long-term horizons can consider purchasing small positions and adding them to that position over time.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of Motley Fool’s board of directors. Lawrence NGA has no position in any of the stocks mentioned. Motley Fool has a position on Amazon and recommends it. Motley Fools have a disclosure policy.
The Motley Fool is a partner at USA Today, providing financial news, analysis and commentary designed to help people control their financial lives. The content is produced independently of USA Today.
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