Why I'm Not Selling Amazon After a 560% Gain

Core Viewpoint - Amazon remains a top investment choice due to its strong growth in e-commerce, cloud services, and advertising, alongside reasonable valuations despite macroeconomic uncertainties. Group 1: E-commerce Business - Amazon is the world's largest e-commerce company, operating localized online marketplaces in over 20 countries and offering international shipping to more than 100 countries [4] - The Prime service has over 220 million subscribers globally, contributing to a sticky ecosystem that attracts shoppers away from smaller retailers [5] - In 2024, online store sales increased by 7% to $247 billion, while physical store sales grew by 6% to $21.5 billion [5] - Growth is supported by the expansion of the third-party marketplace, logistics investments, and AI tools enhancing customer recommendations [6] Group 2: Cloud Business - Amazon Web Services (AWS) is the largest cloud infrastructure platform, holding a 33% market share as of the end of 2024 [8] - AWS revenue rose by 19% to $107.6 billion in 2024, with operating margins expanding nearly 10 percentage points to 37% [9] - The AI market's growth is driving increased spending on AWS, prompting Amazon to expand its data center footprint and develop custom AI chips [10] Group 3: Advertising Business - Amazon's advertising revenue grew by 20% to $56.2 billion in 2024, representing 9% of total revenue [11] - The company is now the third-largest digital advertising platform globally, following Google and Meta Platforms [12] - Future growth in advertising revenue is projected to continue as more users initiate product searches on Amazon [12] Group 4: Valuation - Analysts forecast Amazon's revenue and earnings per share to grow at a compound annual growth rate (CAGR) of 10% and 17% from 2024 to 2027 [13] - The company is considered historically cheap, trading at 28 times next year's earnings and 2.8 times next year's sales [13] - Despite near-term valuation pressures from macroeconomic concerns, Amazon's resilience through past recessions supports its long-term investment appeal [14]