This Thursday the 29th of October, online retail giant Amazon (NASDAQ: AMZN) will release its earnings report with great expectation.
So far this year, Amazon (NASDAQ: AMZN) has risen more than 70%, closing Friday up 0.88% at $3204.40. Now, for many investors, that sort of growth rate would make them hesitant to invest for fear of the growth running out of steam. So, at $3200 a share and already seen a surge in growth, what makes Amazon (NASDAQ: AMZN) stock still appealing?
With much of Europe and the US either in lockdown or teetering on lockdown again, online shopping will increase and Amazon will once again be a big beneficiary of lockdowns.
According to data, Amazon enjoys a sizeable 38% market share of all U.S. e-commerce sales in 2020. To indicate how far ahead Amazon is of its rivals, Walmart was second with just 5.8% market share.
Meanwhile, sales are rising. Amazon sales soared 40% in the three months ending June to $88.9bn (£67.9bn). Profits doubled to $5.2 billion from $2.6 billion from the same time last year.
Looking at Q3, Amazon management has already stated they expect the strong momentum to continue in the third quarter. With further global lockdowns happening or on the horizon, there is nothing to suggest that Amazon will not continue the e-commerce boom.
Amazon Web Services
However it is not just in the e-commerce department that indicates good times ahead for the Amazon stock price.
Amazon’s cloud unit AWS (Amazon Web Services) revenue grew 31% year-over-year to $21 billion in the first half of 2020, roughly 13% of Amazon’s top line. Amazon Web Services’ operating profit leapt 48% to $6.4 billion, accounting for 65% of Amazon’s operating income. AWS is now the world’s top cloud infrastructure platform with a 31% market share in the second quarter of 2020, according to Canalys, considerably ahead of its rivals including Microsoft’s (NASDAQ: MSFT) Azure.
Amazon’s Domination
One of the keys to Amazon’s success is the total domination of its sectors. Amazon’s core e-commerce and cloud businesses are completely dominant. The company’s reinvestment in expanding its delivery network and building massive robotic warehouses means the Seattle-based company founded in 1994, has managed to turn a headwind which has wiped numerous businesses worldwide, into a tailwind producing record results.
Even at $3,200 a share, with the pandemic showing little signs of abating for a while, Amazon (NASDAQ: AMZN) stock remains a good buy.
