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Amazon (NASDAQ: AMZN) stock is definitely a top tech stock to consider buying in 2024. The company is setting the stage for accelerated growth this year with cost-cutting measures coming into play.
Over the past year, positive developments indicate that Amazon is on track to reach new highs. One major advancement is the introduction of generative AI to create and expand generative AI models through Amazon Bedrock. They also unveiled a custom AI chip for deep learning inference. Amazon is poised to build on the momentum gained in 2023.
Free Cash Flow and AMZN Stock
Amazon has evolved into a global powerhouse from its origins as an online bookstore. In addition to e-commerce and speedy deliveries, Amazon Web Services, the company’s cloud computing division, is the leading cloud infrastructure provider with around 31% market share. This segment accounted for approximately 16% of Amazon’s total revenue in 2023.
What’s truly impressive is Amazon’s ability to generate strong free cash flow from operations. In FY23, Amazon produced a record FCF of $36.8 billion, a significant improvement from the $11.6 billion outflow in 2022. Cost-cutting measures and strategic investments in generative AI played a key role in this achievement.
Generative AI Tailwinds to Drive Growth in 2024
Generative AI remains a hot topic in the tech industry, and Amazon is at the forefront with platforms like Amazon Bedrock, Amazon Q, and CodeWhisperer. Amazon Bedrock is a comprehensive generative AI platform that allows AWS customers to develop and scale generative AI applications and foundational models. With over 10,000 customers globally, the platform offers robust security and privacy features.
One of Amazon’s standout offerings is AWS Tranium, a high-performance machine learning accelerator with over 100 billion parameters designed for various applications like code generation, image and video creation, text summarization, and chatbot development. The EC2 deep learning inference chip is custom-built for these applications and promises up to 4X higher throughput for accelerating high-frequency ML models.
AMZN Stock Analysis: Buy Today Not Tomorrow
Investors have plenty of reasons to consider buying AMZN stock beyond just artificial intelligence. CEO Andy Jassy’s leadership has been instrumental in guiding Amazon through challenging times and positioning it for growth. The company’s cost-cutting measures in 2023 and investments in generative AI are paying off.
Amazon continues to see strong momentum in its cloud business, while its fulfillment network through Amazon Prime achieved record fast deliveries in 2023. With the company forecasting 8-13% revenue growth in Q1FY24 and operating income in the $8.0 – $12.0 billion range, now could be an opportune time to invest in Amazon before it reaches new all-time highs in 2024.
On the date of publication, Terel Miles did not have any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Terel Miles is a contributing writer at InvestorPlace.com with over seven years of experience investing in financial markets.
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