What Could Light a Fire Under Amazon.com Stock
AMZN has shown powerful rallies, with more than 30% gains in under two months on 13 occasions, notably in 2010 and 2020. These swift upswings have delivered significant returns for investors. If past trends hold, upcoming catalysts might drive Amazon stock to remarkable new peaks, offering potential for substantial shareholder rewards.
Triggers That Could Boost The Stock
- AWS AI Surge: Q2’25 AWS sales $30.9B, +17.5%. Margin to 38%+ (Q3’24) could add $1.6B OI.
- Ad Revenue Expansion: Q2’25 ad revenue $15.7B, +22% YoY. High-margin growth drives profit.
- International Profit: Q2’25 Int’l Operating Income $1.5B, +448%. Sustained growth boosts overall profitability.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds – likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.
How Do Financials Look Right Now
It certainly helps if the fundamentals check out. For details on AMZN Read Buy or Sell AMZN Stock. Below are a few numbers that matter.
- Revenue Growth: 10.9% LTM and 11.3% last 3-year average.
- Cash Generation: Nearly 2.0% free cash flow margin and 11.4% operating margin LTM.
- Valuation: Amazon.com stock trades at a P/E multiple of 32.8
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and lower margins
| AMZN | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Broadline Retail | – |
| PE Ratio | 32.8 | 24.2 |
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| LTM* Revenue Growth | 10.9% | 5.1% |
| 3Y Average Annual Revenue Growth | 11.3% | 5.3% |
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| LTM* Operating Margin | 11.4% | 18.6% |
| 3Y Average Operating Margin | 7.9% | 17.8% |
| LTM* Free Cash Flow Margin | 2.0% | 13.1% |
*LTM: Last Twelve Months
But How Does The Stock Do In Bad Times?
When thinking about risk, it helps to look at how Amazon has reacted in tough market times. It plunged nearly 94% during the Dot-Com Bubble, which is massive. The Global Financial Crisis hit it for about 65%, and the Inflation Shock during 2022 wasn’t kind either, with a drop of over 56%. Even the less severe events, like the 2018 correction and the Covid selloff, still knocked it down by around 34% and 23%, respectively. So, even with all the positives, Amazon’s history shows it can still take big hits when the market turns south.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read AMZN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.