Amazon Stock Forecast: Is AMZN a Buy?

Written by Sean GraytokUpdated: 8th May 2022
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This Amazon stock forecast will examine its investment potential and help you decide if AMZN is still a buy. 

Amazon Stock Forecast: Investment Potential

Amazon has a market capof $1.7 trillion but continues to grow and innovate like an agile startup.

Amazon’s customer-obsessed culture is the foundation of its success – it stops at nothing to improve the customer’s experience.

Amazon refuses to rest on its laurels, going from two-day delivery to one-day, to same-day, to 2-hour, and soon too before you even know you want whatever it is you’re ordering. It’s always day one at Amazon.

This attitude is stitched into the fabric of the company.

It is one of the many reasons why we’re excited about Amazon’s investment potential for many years to come. 

Amazon Stock Forecast: Moat

A company’s “moat” usually refers to its competitive advantage over other players in the space, which allows it to protect its market share and profitability.

If a company has a weak barrier against the competition, then other firms can swoop in and take a piece of the pie, possibly impacting a company’s stock.

We believe that Amazon’s innovative culture is its moat. It has a proven, and repeatable processes that can be applied to sector of the economy that Amazon competes in.

This recipe is why Amazon can start out as a bookstore and evolve into a e-commerce, grocery, streaming, healthcare, and cloud computing giant.

Speaking of thebest cloud computing stocks: Amazon Web Services (AWS) is another key aspect of the company.

The web services arm of the empire rakes in enough profits to essentially subsidize the company’s other pursuits.

AWS enables Amazon to play the long game in streaming, for example, allowing Amazon Studios to operate at a loss for years.

Amazon Stock Forecast: The Competitors

You should evaluate Amazon’s competitors before buying its stock. This process forces you to consider the company’s strength and possible vulnerabilities as it competes for market share.

Although it is a logistics company at its core, Amazon competes for market share in several industries, so this step will be more complicated than your average company.

According to Amazon’s quarterly and financial statements, Amazon breaks its revenue streams into five major categories.

Let’s examine each of these categories and identify the company’s main competitors:

#1. Online stores

  • Shopify (SHOP)
  • Walmart (WMT)
  • Overstock.com (OSTK)
  • Alibaba (BABA)

#2. Physical Stores

  • Walmart (WMT)
  • Target (TGT)
  • Costco (COST)

#3. Third-party seller services

  • eBay (EBAY)
  • Facebook (FB)
  • Etsy (ETSY)

#4. Subscription services

  • Netflix (NFLX)
  • Apple (APPL)
  • Alphabet (GOOG)
  • Spotify (SPOT)

#5. Amazon Web Services (AWS)

  • Microsoft (MSFT)
  • Alphabet (GOOG)
  • Alibaba (BABA)
  • Oracle (ORCL)
  • Salesforce (CRM)
  • Snowflake (SNOW)

Amazon Stock Forecast & Analysis: Q4 Earnings

Amazon reported Q4 earnings on February 3, 2022. Let’s find out why shares surged following the call:

  • EPS: $5.80 vs $3.57 expected
  • Revenue: $137.4 billion vs $137.6 billion expected, up 9.4% year-over-year
  • AWS Revenue: $17.8 billion vs $17.37 billion expected
  • Advertising Revenue: $9.7 billion, up 32% year-over-year

Amazon shares jumped as much as 14% after the report despite missing on revenue and forecasting weaker-than-expected revenue guidance for the coming quarter. This marked the largest one-day gain in AMZN since 2012.

It was an eventful week for FAAMG. Alphabet and Facebook experienced massive volatility after their earnings release, albeit in different directions.

Google increased 9% and Facebook fell 24% after their respective quarterly updates. So anticipation was high going into Amazon’s call.

It turned out well for shareholders.

Amazon Stock Allocation in Your Portfolio

Finding the right allocation of Amazon stock in your portfolio depends on various factors, such as your investing goals, time horizon and risk tolerance.

These will differ greatly from person to person, so it’s important to organize your investing mental models before pouring your money into a single stock.

Here are some questions to consider:

  • Will Amazon outperform the other tech giants moving forward?
  • Will unfavorable regulation affect Amazon’s ability to grow?
  • Will a post-Bezos Amazon continue to thrive?
  • Can AWS effectively protect market share from Microsoft Azure and Google Cloud?
  • Does Amazon have a favorable competitive landscape?
  • Will Amazon stock outperform the S&P 500 over the next five years?

Final Take: Amazon Stock Forecast

It’s not an accident that Amazon’s been one of the best-performing stocks of the last decade – the company’s culture of innovation continues to exceed Wall Street’s expectations quarter after quarter.

Past performance does not indicate future returns, but Amazon’s success doesn’t appear to be slowing down any time soon.

More Investing Resources:

This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched Amazon.com (AMZN) stock. 

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and leading expert in investing and financial management. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and technologies that are improving the world.