AMZN Stock: No Stopping This Internet Powerhouse
Amazon.com, Inc. (NASDAQ:AMZN) is getting attacked from all angles, namely retailers, who blame the company for their woes, and governments, who are concerned about Amazon’s large influence in retail and the cloud.
AMZN stock is down 9.5% over the past month, but it continues to slightly outperform the Nasdaq this year.
The only thing that could hinder the continued rise of Amazon stock is government intervention, which is something that could happen.
Chart courtesy of StockCharts.com
Unless extremely restrictive regulations are put into place that would cap the growth of Amazon, the next decade and beyond will look bullish for the company.
Investors with longer-term horizons might want to look at accumulating AMZN shares on market weakness.
How AMZN Stock Will Dominate Everything
The drivers for Amazon stock going forward will be the rapidly growing “Amazon Web Services” and the company’s expansion into new areas of retail.
Amazon and Microsoft Corporation (NASDAQ:MSFT) are currently battling it out for a lucrative $10.0-billion cloud contract with the federal U.S. government.
And while $10.0 billion sounds like an enormous sum, consider that Amazon.com, Inc. reported revenues of $232.9 billion in 2018 and is set to ramp this up to $331.6 billion by 2020.
The sheer scale of Amazon scares the retail sector and governments, but I view it as a strength as the company expands.
We know about Amazon’s move into the grocery business, which has effectively hurt the grocery sector. Now there is news that Amazon and its independently run pharmacy venture Pill Pack is seriously looking at expanding into the online pharmacy market.
The move could be massive for AMZN stock, and it could help drive competition and force drug prices lower—something that governments want.
Major drugstore operators Walgreens Boots Alliance Inc (NASDAQ:WBA) and CVS Health Corp (NYSE:CVS) are pushing back, however. You can’t blame them, as both stocks are hovering near their respective 52-week lows.
The reality is that any business sector that has massive scale is vulnerable to Amazon.
At first glance, Amazon stock is not cheap, trading at 54.5 times its 2020 consensus earnings per share. But extending the estimates out a few years and considering the company’s expected five-year compound annual growth rate for earnings, the stock is actually trading at a discount.
Looking ahead to the next 10 years and it’s conceivable that Amazon.com, Inc. could become valued at $2.0 trillion. That’s why AMZN stock is a potential keeper.