Is Amazon Stock a Long-Term Buy?

Core Viewpoint - Amazon has historically provided positive returns for investors over any five-year period, indicating strong long-term investment potential despite recent stock pullbacks [1][2] Retail Business - Amazon's retail operations generated nearly $100 billion in net sales in Q1 2025, accounting for 64% of the business [3][5] - The company has a vast customer base and extensive logistics infrastructure, making it difficult for competitors to disrupt its retail business [5] - Tariff uncertainties pose challenges, but they are industry-wide issues that are unlikely to disproportionately affect Amazon compared to its competitors [5][6] Amazon Web Services (AWS) - AWS generated $112 billion in trailing-12-month net sales and grew by 17% in Q1 2025, indicating strong ongoing growth potential [7][8] - Only 15% of global IT spending is currently directed toward cloud computing, with expectations that this will rise to 85% in the next 20 years, suggesting significant growth opportunities for AWS [8] - The AI segment of Amazon is growing at over 100% annually and is already generating billions in net sales, further driving AWS's growth [9][10] Profitability and Future Outlook - AWS's operating margin was nearly 40% in Q1, contributing 63% of the company's total operating income, highlighting its profitability [11] - As AWS continues to grow, particularly with the shift towards cloud computing and AI, Amazon's overall profits are expected to increase significantly [11][12] - While immediate results may not be visible in 2025, there is confidence that Amazon's profits will be substantially higher in five years, likely boosting the stock price [12]