Amazon Stock Continues to Soar, Offering Growth Opportunities in 2024
Amazon (NASDAQ:AMZN) stock, one of the “Magnificent Seven” tech stocks, has experienced a remarkable rebound this year, with a gain of 78.8%. However, it’s not too late to invest in the shares.
There are several factors that suggest there is still room for significant revenue, earnings, and share price growth next year, apart from Amazon’s legacy e-commerce segment.
Despite its rapid growth over the past few decades, Amazon is far from being a slow-growing enterprise. Vigorous growth is still on the horizon, which is great news for AMZN stock investors. While the retail segment remains solid, two other segments are expected to drive top-line expansion. Amazon’s AWS cloud computing segment continues to flourish, and its digital advertising division has ample room to grow, considering the size and future growth of the global digital advertising market.
Furthermore, organic growth across all segments is leading to outsized growth in profitability, thanks to operating leverage and the company’s efforts to decrease overhead expenses and increase efficiency. This suggests that revenue and earnings growth will continue to meet or exceed expectations.
Looking ahead to 2024, AMZN stock is currently trading at around 61 times next year’s estimated earnings ($2.52 per share). While this is a rich forward valuation compared to other “Magnificent Seven” stocks, Amazon is not likely at risk of experiencing multiple contraction. With the expected level of earnings growth next year (around 64.7%) and the increasing chances of lower interest rates, AMZN’s current valuation is sustainable.
While it’s uncertain whether there will be multiple expansion, even if the stock rises in tandem with further earnings growth, it could result in strong returns for shareholders. Forecasts for 2025 call for earnings of $3.64 per share, a 44.4% increase compared to 2024. Although forecasting earnings that far into the future is more art than science, subsequent developments, such as growth re-acceleration for the company’s cloud segment or the monetization of Amazon’s AI-related endeavors, could increase this forecast.
Considering the long growth runways for both AWS and the advertising segment, there is potential for AMZN stock to deliver outsized gains not just next year, but in the years beyond as well. The latest macro and company-related developments strongly suggest more positive news lies ahead for Amazon.
In conclusion, Amazon stock remains amazing and continues to be a winner. Investors can confidently buy AMZN stock at current prices.
AMZN stock earns an A rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in AMZN. The InvestorPlace Research Staff member primarily responsible for this article did not hold any positions in the securities mentioned.
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