Amazon (AMZN) has struggled to keep pace with the S&P 500 over the past five years, with its stock rising just 38% compared to the index’s 67%. Year-to-date, Amazon shares are down approximately 6.5%. Despite these challenges, the company’s fundamentals remain strong, particularly in three key areas that suggest a potential turnaround.
First, Amazon Web Services (AWS) is showing signs of renewed growth, with a recent 24% year-over-year revenue increase—the fastest in over three years. This growth is supported by a substantial $244 billion backlog, indicating robust demand. Second, Amazon’s advertising segment is emerging as a significant revenue driver, with a 23% increase in advertising revenue last quarter, leveraging its vast data and user base. Lastly, the company’s push for automation in e-commerce is enhancing efficiency and profitability, despite the short-term impacts of layoffs.
Investors should consider these developments as potential catalysts for Amazon’s recovery, particularly as AWS and advertising become increasingly vital to its growth narrative.
Source: fool.com