Amazon.com, Inc. (AMZN): A Bull Case Theory

We came across a bullish thesis on Amazon.com, Inc. (AMZN) on Substack by Quality Equities. In this article, we will summarize the bulls’ thesis on AMZN. Amazon.com, Inc. (AMZN)’s share was trading at $205.71 as of March 25^th. AMZN’s trailing and forward P/E were 37.20 and 31.25 respectively according to Yahoo Finance.

Amazon remains a dominant force in e-commerce and cloud computing, offering a compelling long-term investment opportunity. Despite recent market volatility, high-quality companies like Amazon often become available at attractive valuations, creating opportunities for those with a long-term perspective. With its diversified business model spanning retail, AWS, advertising, and logistics, Amazon continues to leverage its scale and innovation to drive sustained growth.

AWS remains Amazon’s most significant growth engine, delivering strong margins and funding expansion across the company. The integration of AI into AWS is set to accelerate its momentum, with TD Cowen projecting AWS Gen AI revenue to grow from $2.8 billion in 2024 to $56.3 billion by 2030, representing a 51% CAGR. This rapid growth reinforces Amazon’s leadership in cloud computing while unlocking new revenue streams. Additionally, Amazon’s expanding advertising business, fueled by its rich customer data and precise targeting capabilities, continues to drive profitability and margin expansion.

With a strong balance sheet, continuous reinvestment, and a culture of innovation, Amazon is well-positioned for long-term value creation. Assuming an EPS CAGR of 20% over the next five years and an earnings yield of 3.5%, shares could deliver an annualized return of 14.91%. Given Amazon’s track record of execution and growth, these projections remain reasonable. The current valuation presents a compelling entry point with substantial upside, making Amazon a standout investment opportunity.

Amazon.com, Inc. (AMZN) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 339 hedge fund portfolios held AMZN at the end of the fourth quarter which was 286 in the previous quarter. While we acknowledge the risk and potential of AMZN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.