Amazon’s stock price has more than doubled since the start of 2023, outperforming the S&P 500 and the online retail segment. The company’s traditional operating segments, including online stores, third-party seller services, advertising, subscription services, physical stores, and others, account for the majority of its revenue. These segments have seen high growth, but competition has been increasing, leading to a slowdown in growth recently. However, Amazon has made strategic changes, such as incorporating commercials in its Prime Video offerings, which have led to an increase in subscription and advertising revenue.
One of Amazon’s major growth drivers is Amazon Web Services (AWS), the leading provider in the cloud computing industry. AWS has experienced rapid growth, accounting for almost 16% of Amazon’s sales. The cloud services industry is expected to grow significantly in the coming years, with AWS maintaining its market leadership and 30-35% market share. The company is investing heavily in AWS to ensure its success and capitalize on the growing market opportunities. Analysts are forecasting annual revenue just below $640 billion for Amazon in 2024.
While the stock is currently trading slightly higher than the estimated fair value, many analysts believe Amazon will exceed expectations due to higher revenue in its traditional segments and continued growth in AWS. One way for investors to buy into Amazon is by selling put options with a strike price at a desired level. By selling put options at $180 for May 31 expiration, investors can potentially receive premiums while having the opportunity to purchase the stock at the specified price. This strategy allows investors to generate income while potentially buying the stock at a price they find attractive.
Overall, Amazon’s stock has performed well in 2023, driven by strong performance in its traditional operating segments and AWS. The company’s strategic changes and investments in key growth areas position it for continued success in the future. With the potential to outperform analyst expectations and deliver strong revenue growth, Amazon remains an attractive investment option for investors looking to capitalize on the e-commerce giant’s continued growth trajectory.
