Amazon.com Inc. (AMZN) delivered solid results on its second-quarter earnings last week. The company posted increases for all its key metrics and across all its segments. Shares rose after the results release and Amazon, along with peer Alphabet (GOOGL), managed to give the stock market a beacon of hope while Facebook (FB) and Twitter (TWTR) were getting kicked in the shins.
Even while concerns surround the FAANG stocks, there appears to be no doubt around Amazon. If anything, it seems that most of Wall Street expects the best from Amazon. Here is why we think Amazon’s growth is likely to continue for a long time to come.
Amazon is everywhere. The company has entered almost every sector and has varied businesses that will help drive revenues and profits even through tough times. Amazon continues to expand overseas and it sees growth in its international market. This growth is expected to continue and provide significant benefits to Amazon going forward.
Apart from retail, Amazon has a presence in technology, grocery, and even healthcare. For the most recent quarter, Amazon Web Services (AWS) revenues grew 11% year-over-year to just over $6 billion. AWS continues to win customers and is increasing its footprint at a healthy pace.
With the acquisition of Whole Foods, Amazon took a step to strengthen its presence in the grocery business, and the company is adopting innovative strategies to enable its growth in this space. The purchase of PillPack brought Amazon to the pharmacy business, and the mail-order prescription company is expected to provide a fresh source of revenue to the online retailer. When integrated with the Prime service, these businesses will enhance growth further.
Talking about revenue streams, another huge one is advertising. This high-margin business already provides a chunk of revenue to Amazon, and it is expected to grow significantly in the future too.
Amazon makes significant investments in its businesses and most of these pay off well, which is why investors have always been patient with Bezos and his ventures. Within technology, alongside AWS, Amazon has been investing in its smart-home devices with a particular focus on Alexa. Amazon is continuously working to improve Alexa’s skills and to integrate the voice assistant with as many devices as possible. Amazon has partnered with several companies for this purpose.
Amazon has been investing in its smart-home devices with a particular focus on Alexa
Amazon is also investing heavily in artificial intelligence and machine learning. The company’s drone delivery project is one of its many ambitious ventures. Amazon is also making considerable investments in its Whole Foods and grocery businesses. Most of Amazon’s investments are made with precision, and even if they take a while to pick up, they end up delivering returns.
Another one of Amazon’s key strengths is its capability to come up with innovative strategies. One example is the cashier-less convenience store Amazon Go. Amazon’s strategy to add several benefits to its Prime service is another clever way of keeping the customers content and, quite frankly, hooked to its system. Amazon is also good at striking strategic partnerships to increase the sales of its products and grow its business.
Amazon never sits still. It comes up with one novel idea after another in order to improve and excel. Amazon is very close to becoming a trillion-dollar company, and it would not be a surprise if it reached that milestone before Apple (AAPL). Amazon has not just made CEO Jeff Bezos rich; it has enhanced the wealth of everyone associated with it. Although it appears to some that Amazon is getting too big to handle, the retailer seems to have a firm footing, and it will continue to walk plenty of miles ahead.
Amazon’s stock has climbed over 53% year-to-date and currently stands at $1,788.58.
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