FINANCE

3 Amazon Stock Predictions for 2024


In early 2023, I made three predictions for Amazon (NASDAQ: AMZN) stock investors. Let’s see how I did:

  1. I predicted that Amazon’s e-commerce sales would bounce back. In the three quarters reported for 2023 thus far, online sales growth has accelerated from the corresponding prior-year periods, so I’ll put that in the win column.

  2. My call that Amazon would dive further into healthcare played out as well. Amazon completed its $3.9 billion acquisition of One Medical; rolled out RxPass, a monthly prescription service; and launched Amazon One Medical for Prime, offering Prime subscribers access to certain healthcare services for $9 per month.

  3. I also correctly called that Amazon would maintain its lead in cloud computing. Through the first three quarters of 2023, Amazon controlled roughly 30% of the market, on average, with Microsoft coming in at 25% and Alphabet‘s Google Cloud maintaining 9%.

  4. As a bonus prediction, I posited that Amazon stock would rebound from its historic lows, and boy howdy, was I right. After losing half its value in 2022, Amazon stock soared 81% in 2023, making it one of big tech’s top performers.

I was correct in all three of my prognostications and also scored during the bonus round, though each of those seems like a slam dunk in hindsight. Let’s see if I can keep my streak going with three predictions for 2024.

Digital bar chart projected above a laptop with a user highlighting 2024.

Image source: Getty Images.

1. Amazon’s cloud growth will reaccelerate

While Amazon maintained its seat atop the cloud heap, its growth struggled. Since peaking in the fourth quarter of 2021, year-over-year growth has decelerated with each successive quarter. This shouldn’t come as a surprise, as that was right about the time the downturn began, with the economy only recently regaining its footing.

In the third quarter, Amazon Web Services (AWS) finally stabilized, matching the 12% growth it generated in the second quarter. I predict that growth will continue to stabilize, before reaccelerating and marching higher in 2024, fueled by an improving economy.

2. Amazon’s artificial intelligence is a sleeping giant

This prediction is inexorably tied to the first. Despite improving macroeconomic conditions, last year’s stock market recovery was largely uneven. The biggest winners were the companies best positioned to capitalize on the opportunity represented by advances in generative AI.

Early last year, while Microsoft and Alphabet were stealing the spotlight, releasing generative AI tools on their respective platforms, Amazon was largely absent from the conversation. That led some to conclude that Amazon was “behind” in the AI race, a perception that still lingers.

Amazon is working to change that. Late last year, the company released Amazon Q, its own generative AI-powered digital assistant, designed to help increase productivity among AWS cloud users. Q taps into company-specific sources to answer questions, generate content, and streamline a variety of tasks. AWS also offers a wealth of generative AI models via Amazon Bedrock, as well as providing access to Nvidia‘s latest AI chips, the H200 Tensor Core graphics processing units.

It’s important to remember that it’s still early days in generative AI, as the current iteration of the technology has only been public for roughly 14 months. There’s still plenty of time for Amazon to stake its claim, and as the world’s largest cloud provider, it’s well-placed to do just that.

Not only will Amazon’s cloud growth reaccelerate, but the company will become a force to be reckoned with in generative AI, with AWS as the facilitator.

3. Amazon will join Microsoft and Apple in the $2 trillion club in 2024

Despite a run-up of 81% in 2023, the aforementioned catalysts suggest there’s still growth ahead for Amazon. There’s also the company’s industry-leading e-commerce platform, which has struggled in the face of high inflation. Furthermore, Amazon is a growing force in digital advertising, with ad sales that grew 23% to $32.2 billion through the first nine months of 2023, outpacing the growth of its largest rivals, Alphabet and Meta Platforms, which grew 4% and 13%, respectively.

Amazon’s continuing dominance in e-commerce and cloud computing, coupled with its growing importance in digital advertising and generative AI, will fuel solid financial results, driving additional stock price gains in 2024, pushing its market cap above $2 trillion.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

 

*Stock Advisor returns as of January 16, 2024

 

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

3 Amazon Stock Predictions for 2024 was originally published by The Motley Fool



Source link