Amazon(AMZN) The Motley Fool·2025-04-20 10:53Core Viewpoint - The ongoing trade war between China and the United States poses challenges for Amazon, but it presents a significant buying opportunity for long-term investors due to the company's strong business model and growth potential in artificial intelligence and e-commerce [1][3]. Group 1: Retail Business Resilience - Amazon's reliance on Chinese sellers for its online marketplace is significant, with a disclosure about this risk included in its annual report [4]. - Despite potential disruptions from tariffs, Amazon's business model allows for the replacement of Chinese sellers with those from other countries like Vietnam and Mexico over time [5]. - The majority of Amazon's retail profit comes from fees from third-party sellers, advertising services, and Amazon Prime subscriptions, which are expected to grow as long as consumer spending increases [6]. - North America retail revenue reached 25 billion, indicating a strong foundation for future growth despite tariff challenges [8]. Group 2: AI and Cloud Computing Growth - Amazon Web Services (AWS) is the largest cloud computing business globally, generating 40 billion [9]. - AWS is experiencing accelerated revenue growth due to increased AI spending, with sales growing 19% year over year last quarter compared to 13% in the same period of 2023 [10]. - The potential for AWS to double its revenue over the next five years could lead to an operating income of $80 billion, making it one of the most profitable segments within Amazon [11]. Group 3: Investment Opportunity - The current downward trend in Amazon's stock price presents an opportunity for investors to buy shares just as profits are expected to increase due to rising AWS spending and growth in high-margin segments like advertising [13]. - Amazon's stock trades at a forward price-to-earnings ratio (P/E) of 28, suggesting potential for long-term growth driven by cloud computing and e-commerce [14].