Amazon stock plunges 19.1% in a month, but long-term prospects are positive with strong AWS growth.

From Nasdaq: 2024-08-07 12:01:00

Amazon’s stock has dropped 19.1% in the past month, wider than the industry and S&P 500 declines. The company’s lower-than-expected Q2 revenues, weak Q3 revenue guidance, and changing consumer spending patterns are concerning factors. However, the company’s AWS segment is showing strength in generative AI capabilities and expanding clientele growth.

AWS, Amazon’s cloud computing business, is benefiting from generative AI capabilities and partnerships with companies like Exscientia, SAP, CrowdStrike, and Brightcove. The Zacks Consensus Estimate for AWS revenue in 2024 is $106.6 billion, indicating a 17.4% growth. AWS’s expanding customer base is expected to drive top-line growth and maintain a competitive edge in the global cloud market.

Amazon’s long-term prospects are positive, with a growing AWS momentum fueled by generative AI capabilities and an expanding data center network. The Zacks Consensus Estimate for 2024 revenues is $634.78 billion, indicating a 10.4% year-over-year increase. Despite near-term challenges in the retail sector, Amazon’s focus on AI integration and innovative product development present a solid investment opportunity.

Investors are advised to hold on to their Amazon stock due to the company’s fundamental strengths and growth drivers, despite concerns such as slow e-commerce sales growth and geopolitical tensions. New investors should wait for a more attractive entry point considering the premium valuation. Amazon currently carries a Zacks Rank #3 (Hold). For potential high-growth stocks, consider Zacks’ 5 picks set to double in 2024.



Read more at Nasdaq: Amazon (AMZN) Plunges 19.1% in a Month: Should You Buy the Dip?