Main topic: Amazon and Alphabet's potential to achieve $3 trillion valuations by 2030
Key points:
1. Amazon: Growth prospects in e-commerce, digital advertising, and cloud computing contribute to its potential market cap rise to $3 trillion by 2030.
2. Alphabet: Growth prospects in digital advertising and cloud computing, along with opportunities in AI software and robotaxi services, contribute to its potential market cap climb to $3 trillion by 2030.
### Summary
The author discusses two major trends that are driving Amazon's success: fulfillment & delivery and artificial intelligence.
### Facts
- Amazon's dominance in e-commerce and delivery is causing difficulties for retailers and traditional delivery services.
- Amazon is outgrowing its major retail and delivery competitors in terms of revenue growth.
- Amazon's AI capabilities are built around a massive database of supplier/consumer/product linkages, allowing for various applications such as supply chain optimization and fraud prevention.
- Amazon's actual performance compared to its peers suggests a positive outlook for shareholders.
- Amazon's financials show increasing revenue, gross profit, operating income, net income, and operating cash flow, as well as improving gross profit margin and operating margin.
- The biggest risk for Amazon is potential scrutiny from antitrust enforcers.
The global consumer electronics market is projected to reach $1.38 trillion by 2028, with smartphones driving growth and technology trends such as 5G networks, IoT, and sustainability shaping the market.
Amazon and Alphabet have the potential to achieve $3 trillion valuations by 2030 due to their strong presence in e-commerce, digital advertising, and cloud computing, as well as their potential growth in AI software and other areas.
Amazon's advertising business, which already generates billions in revenue, is projected to become as important as its cloud business and could reach $100 billion in size, as the company uses its vast data and integrated businesses to target customers and drive conversions.
Amazon's core value proposition of low prices, quick delivery, and a wide selection of merchandise, along with its investments in its distribution network and advertising business, are expected to drive its future earnings growth and make it a formidable force in the online retail and digital ad industries.
Amazon stock gained 3.5% and is approaching a buy point, with a 69% increase this year to outpace the Nasdaq and S&P 500, making it one of the top stocks in the Magnificent 7.
The generative AI market is predicted to grow by 42% annually, reaching $280 billion by 2033, with Amazon being identified as an AI stock that is worth accumulating for long-term investment due to its resurgence in the second quarter, its strong presence in e-commerce, digital advertising, and cloud computing markets, as well as its leadership in AI through Amazon Web Services (AWS).
Amazon's efforts to improve profitability have been praised, with its stock potentially seeing further upside if its North American retail business continues to become more profitable, according to a research note from Morgan Stanley.
Despite still being in a bear market, Amazon's stock is thriving in 2023 due to its acquisitions, strength in core activities, and attractive price, making it an opportune time to invest.
Amazon has agreed to invest up to $4 billion in AI startup Anthropic, aiming to enhance its rivalry with Microsoft, Meta, Google, and Nvidia in the rapidly growing AI sector.
Best Buy and Amazon are offering discounts on MacBook Air and MacBook Pro models, with savings of up to $250, including record low prices on the 13-inch MacBook Air from 2020, 13.6-inch MacBook Air from 2022, and 13-inch MacBook Pro from 2022.
Goldman Sachs strategists have noted that the largest tech stocks, including Apple, Microsoft, and Amazon, are now trading at their cheapest valuation relative to the median stock in over six years, as their price-to-earnings ratio has fallen to 27 from 34.
Amazon is currently offering the Apple 256GB 13-inch M2 MacBook Pro for $999.00, a $300 discount, making it the lowest price ever seen for the 2022 model.
Amazon is working to regain sustained growth and profitability after a period of decline, but it is also facing a major legal battle with the U.S. government and potential antitrust scrutiny overseas. Additionally, the company is focusing on generative artificial intelligence and preparing for a busy holiday shopping season.
Samsung emerged as the top smartphone brand in Q3 2023, surpassing Apple and other competitors, despite a decline in overall market shipments.
Amazon.com's current trading price of US$133 is considered to be fairly valued according to a valuation model, but with the potential for high growth and cash flow in the future, there may be a prime buying opportunity if the share price drops below its fair value.
