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When it comes to Cloud Czars, Amazon.Com (NASDAQ:AMZN) stands out as the one with the most potential for growth. AMZN stock investors should keep this in mind.
The big question for investors is whether Amazon will be able to reach that potential.
Amazon is not just the world’s second-largest retailer after Walmart (NYSE:WMT). It also dominates the cloud market with a 30% market share and the streaming market with the Fire streaming stick and three streaming services.
But can Amazon maintain its dominance in the era of Artificial Intelligence (AI)?
Why Nvidia Surpassed Amazon
Nvidia (NASDAQ:NVDA) recently surpassed Amazon in market cap for a simple reason – it can make more money selling chips than Amazon can selling shoes. Nvidia is a software company, while Amazon is an infrastructure company.
While Amazon’s revenue mainly comes from retailing, which has small margins, Nvidia reported over half of its fourth-quarter revenue as net income.
AMZN stock is facing pressure to stay ahead of its competitors, leading to significant capital spending. The company recently announced major investments in data centers in Saudi Arabia and Mexico.
AI: A Double-Edged Sword for Amazon
AI presents both opportunities and challenges for Amazon. While it can increase business for Amazon Web Services, the company is also facing issues with fraudsters using AI tools to create fake products.
Despite these challenges, Amazon is leveraging AI to improve its systems and offer better services to customers.
Bears Express Concerns
Some investors are concerned that Microsoft and Alphabet are on track to overtake AWS in the cloud market.
Amazon’s Secret Weapon
Amazon’s ad revenue, totaling $14.65 billion in the fourth quarter, is considered its secret weapon. The company’s addressable TV ads give it a competitive edge in the advertising space.
The Bottom Line
Like Apple, Amazon is a stock you own, not just buy. With opportunities in healthcare, banking, and advertising, there is still significant upside potential for AMZN stock.
As of now, Dana Blankenhorn holds long positions in MSFT, AAPL, GOOGL, NVDA, and AMZN. The opinions expressed in this article are his own.
The original article can be found on InvestorPlace’s website.