Amazon(AMZN) The Motley Fool·2025-03-21 08:07Core Viewpoint - The recent market sell-off has created attractive entry points for equities, particularly for Amazon, whose shares are down approximately 20% from their highs [1] Investment Strategy - Amazon has a history of heavy investment, building the world's largest warehouse and logistics network, transitioning from an online book seller to the largest e-commerce marketplace [2] - The company prioritizes long-term growth over short-term profits, which has contributed to its status as one of the largest companies globally [4] Business Segments - Amazon Web Services (AWS) is the most profitable segment, having pioneered the infrastructure-as-a-service model since its launch in 2006 [3] - AWS has experienced strong growth, with segment revenue increasing by 19% last quarter, although it faces capacity constraints due to high demand [7] - E-commerce remains a significant growth area, with North American revenue up 10% and international revenue increasing by 8% in Q4 [10] Financial Performance - Operating income growth outpaces revenue growth, with North American operating income rising by 43% last quarter and international operating income turning from a loss of 1.3 billion [11] - Advertising revenue grew by 18% to 100 billion in capital expenditures this year, primarily to expand AWS data center infrastructure [7] - High capital expenditure increases depreciation costs, impacting short-term earnings, but historically, Amazon has emerged stronger from such investment phases [8][9] Valuation - The recent price drop has resulted in Amazon trading at a trailing price-to-earnings (P/E) ratio of 34.5 and a forward P/E of just over 25 times 2026 analyst estimates, indicating an attractive valuation [14] - With significant AI opportunities ahead, the current market conditions present a favorable time to invest in Amazon stock [15]