We recently compiled a list of the 10 Best Delivery Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against the other delivery stocks.
The growth of global e-commerce is linked to a surge in demand for delivery services. According to research by environmental organization Stand.earth, global e-commerce is anticipated to grow at a rate more than twice that of in-store purchases. It is anticipated that by the end of this decade, 25,000 parcels will be shipped per second. The rise in global e-commerce has also produced a change in people’s shopping behaviors around the world. Online shopping accounts for about 15% of all American purchases, with an estimated yearly value of $1 trillion, as reported by Bloomberg.
ParcelHero projects that the global delivery and courier market will reach $648 billion by 2030, expanding at a compound annual growth rate (CAGR) of 4.31%, driven by improved logistics technologies and e-commerce. The market was valued at $482.9 billion in 2023, representing a 2.5% annual growth rate with a 5% growth from 2018 to 2023. The UK market is projected to reach $32 billion by 2030, with a compound annual growth rate (CAGR) of 6.22% from its 2023 valuation of $20.97 billion. The transportation management systems market is anticipated to surge by 19.7% from its 2023 valuation of $13.5 billion to $33.3 billion by 2028. Innovations in technology, such as tracking, automation, and AI-powered logistics, will boost productivity and accommodate growing package volumes.
Shipping and delivery times remain a key concern for customers. Recent data from Digital Commerce 360 and Bizrate Insights reveal that customers have remained committed to giving free and quick shipping top priority while placing online shopping in 2024. According to a survey of 1,013 online buyers, 81.34% of them rank free shipping as their main concern when receiving deliveries. Next in line is fast shipping, which was highlighted by 68.41% of respondents. Furthermore, 55.68% of customers stressed how important it is for merchants to maintain inventory and shipping readiness.
The demand for food delivery services has also increased dramatically as a result of the COVID-19 outbreak. Restaurants had to rely more on outside delivery services to stay afloat since dine-in options were shut down or severely restricted in many areas of the United States. Additionally, online grocery delivery and pickup services flourished as customers avoided going to stores. According to Bloomberg, online restaurant ordering accounted for about 40% of total restaurant sales in 2023, just over $22.4 billion in 2021, and has grown 300% faster than dine-in sales since 2014. CB Insights forecasts that the food delivery market size will grow to $320 billion by 2029.
In addition, drone technology is increasingly being used across the US, with leading companies providing faster delivery services, particularly for short-distance shipments. As per McKinsey, drone delivery services are expanding, with over 800,000 paid commercial deliveries globally by 2023. According to the firm’s most recent projections, the total addressable market in the United States alone is predicted to reach $5 billion by 2035, with an estimated 1.5 billion deliveries annually. Therefore, drone delivery is one of the first commercialized sectors of the larger future air mobility market, which also includes other platforms that use new aircraft, like urban and regional air mobility, as well as other commercial drone use cases, such as inspection or surveillance.
Even though drone deliveries are not yet widely available, 83% of consumers in six countries who participated in a McKinsey survey were aware of them. India leads at 92% and the U.S. comes in last at 53%, with 76% of respondents saying they would be willing to switch, reflecting a 19% growth from 2021. With 35% willing to pay up to 1.5 times more, 58% of respondents are willing to pay a premium. The most preferred use case is express shipping (56% are willing to switch), which is followed by food and medical delivery. Urban residents (80%) and frequent consumers (68% prepared to pay more for food delivery) have the highest adoption potential. Finally, operators should put speed and convenience first because 20% of customers currently pay for expedited shipment, showing that there is a high demand for faster alternatives.
A customer entering an internet retail store, illustrating the convenience of online shopping.
Our Methodology
For this article, we scanned Insider Monkey’s Q4 2024 proprietary database of billionaires’ stock holdings and identified delivery stocks from the list. These companies are involved in logistics, shipping, and last-mile delivery services. From there, we picked the top 10 stocks with the highest number of billionaires having a stake in them. Where two or more stocks were tied on billionaire sentiment, we used the dollar value of billionaire holdings as a tiebreaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Amazon.com, Inc. (NASDAQ:AMZN)
Number of Billionaires: 40
Billionaire Holdings: 33,043,036,466
Amazon.com, Inc. (NASDAQ:AMZN) is a renowned American technology firm that sells a wide range of products, from electronics to books, on its vast e-commerce platform. The business has expanded to become the biggest online retailer in the world and a pioneer in cloud computing due to Amazon Web Services.
One important component of its company is its delivery services, which include rapid shipping choices such as Amazon Prime. It allows customers to receive their goods swiftly through same-day delivery, one-day delivery, and two-day delivery services. Thus, Amazon.com, Inc. (NASDAQ:AMZN) is the Best Delivery Stock.
Amazon.com, Inc. (NASDAQ:AMZN) reported $187.8 billion in Q4 2024, a 10% year-over-year growth in revenue, and $21.2 billion in operating income, a 61% YoY gain. Amazon Web Services boosted its annualized revenue run rate by 19% year on year, to $115 billion, due to strong demand for both generative and non-generative AI services. At $17.3 billion, advertising revenue grew 18% year over year, helping to generate a yearly run rate of $69 billion.
Amazon.com, Inc. (NASDAQ:AMZN) delivered over 9 billion units the same or next day worldwide and grew its same-day delivery sites by more than 60%, now reaching 140 metro areas. The expansion of Prime membership was driven by new fuel discounts, exclusive events, and expanded advantages like unlimited free delivery.
Polen Focus Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Consistent with our thesis, Amazon.com, Inc. (NASDAQ:AMZN) has continued to see operating margins expand, hitting 11% in the most recent quarter after bottoming around 2% at the end of 2022. This march higher in margins stems from a mix shift towards faster-growing, higher-margin segments like Amazon Web Services (AWS) and Advertising, combined with better fulfillment efficiency in the e commerce business following significant investments in recent years. Further, speaking to its runway ahead, CEO Andy Jassy noted the company’s AI business is a “multi-billion-dollar business growing triple digits,” 3x faster than AWS did itself at the same stage in its evolution. While we trimmed our position during the quarter, Amazon remains our largest position, as we expect approximately 20% earnings growth over the next five years driven by a mix of solid organic revenue growth and continued margin expansion.
We trimmed our positions in UnitedHealth Group, Amazon, ServiceNow, and Gartner during the quarter. Amazon continues to deliver excellent results with all businesses growing robustly and profit margins expanding. When we significantly increased Amazon’s weighting in the portfolio about two years ago, its operating margins were at 2%, and we anticipated they would expand to the mid-teens over the next few years. Today, they stand at 11%, and we expect them to expand closer to the high-teen level in the next few years. The earnings growth potential from here is roughly 20% per annum based on our expectation for revenue and profit margin expansion. While this still represents excellent potential and Amazon remains our largest position, we no longer feel it merits a maximum position size.
Overall, AMZN ranks 1st on our list of the Best Delivery Stocks to Buy According to Billionaires. While we acknowledge the potential for 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 time frame. 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.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.