Should You Buy Amazon Stock in 2025?

Valuation and Market Performance - Amazon's shares trade at nearly 36 times forward earnings, making it the second-most expensive "Magnificent Seven" stock [2] - Amazon's stock skyrocketed 81% in 2023 and is on track to finish 2024 up close to 50% [10] - The company's earnings multiples have been even higher in the past, with its share price continuing to climb [1] Earnings and Cash Flow - In Q3 2024, Amazon reported earnings of $15.3 billion, up nearly 55% year over year [13] - Free cash flow nearly tripled year over year to $44.9 billion in Q3 2024 [13] Cloud Services and AI - AWS is poised to benefit from the shift in global IT spending from on-premises to cloud, which is expected to reverse over the next 10 years [3] - The AI boom that boosted AWS could be slowing down, potentially translating to slower growth for AWS and its cloud services peers [8] - Amazon is expected to be a key player in the race for AI agents, which could be the next big thing in AI [7] E-commerce and Retail - Amazon's CEO predicts that the current mix of 80% to 85% of retail in physical stores will flip in the next 10 to 20 years, with e-commerce taking the lead [14] - As the leader in e-commerce, Amazon is expected to be one of the biggest winners if this prediction holds true [14] Economic and Market Risks - Economic uncertainty and potential Federal Reserve actions on interest rates could negatively impact Amazon in 2025 [11] - Steep tariffs pledged by President-elect Trump could cause product prices to rise, potentially leading to a decline in consumer spending and hurting Amazon's business [2] Investment Perspective - Amazon stock is considered a good pick for growth-oriented investors with a long-term perspective, despite not paying a dividend [9] - The chances are good that Amazon stock will increase in the new year, but there are many variables that could present problems [5]