It’s easy to think Amazonof the (NASDAQ: AMZN ) The best days must be behind her. The company grew from founder Jeff Bezos’ garage to become a multi-trillion dollar enterprise in just 30 years. It has become a leading force in e-commerce, forcing the entire retail industry to embrace online distribution and home delivery. And because it has embraced technology in its business, Amazon has developed the expertise to offer customers groundbreaking tools through its Amazon Web Services (AWS) division, and the business has become a leader in cloud computing.
Yet even though the company has already grown tremendously, Amazon’s future still looks bright. Recently, CEO Andy Jassy went through all the ideas that he is helping the company expand. If Jesse can execute well in turning these ideas into popular products and services, then shareholders may see the mid-2020s as the time when Amazon truly realizes its full potential. For that in this third and final article on Amazon Voyager Portfolioyou will learn more about Jassi’s plans and whether they will come to fruition.
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It shows that in discussing ways to grow, Jesse starts with AWS. Amazon has seen many large companies choose AWS to move their IT infrastructure to the cloud, with new agreements with OpenAI among well-known giants in financial services, transportation, telecommunications, and technology. Perhaps most importantly for the future, more than 500 top startups in the US use AWS, and that bodes well for Amazon to watch for years to come.
To address demand, Amazon is focusing on its proprietary solutions. Its Graviton custom CPU silicon is more affordable than competing products and ensures that Amazon controls its supply chain. To help customers choose AI, Amazon has its own Bedrock platform to choose internet models. And with its Trinium line of AI chips, Amazon is going big Nvidia (NASDAQ: NVDA ) And the first leader in market dominance.
Most of the $200 billion in capital spending that Amazon has planned is earmarked for AWS. That’s because this is where most of the growth is, especially associated with AI workloads. Jassi is confident that Amazon will be able to pay off this part of the business in the long run.
Don’t get the impression, though, that Jesse is considering Amazon’s e-commerce powerhouse. The CEO pointed to the launch of new beauty and fashion brands, while its discount retailer Amazon Hall expanded to 25 countries. Amazon has become the grocer of choice for more than 150 million people in the United States, combining Whole Foods’ physical store locations and online shopping options. Testing AI agents can once again transform the shopping experience for Amazon customers in ways that drive more sales.
The first service continues to add value. Prime video has built a large audience, topped by NFL football coverage and other live sports. Prime now includes Alexa Plus, with new AI-powered chat capabilities and more integrations with popular consumer products. And in response to growing needs for connectivity, Amazon’s LEO low-Earth-orbit satellite communications platform aims to bring ubiquitous satellite broadband to customers around the world.
Despite all these growth projects in the pipeline, Amazon has faced some resistance from its shareholders. Some investors believe that such a large investment can really pay off in the long run. Amazon’s shares have lagged in performance compared to peers.
For those who see Amazon’s AI aspirations as not only realistic but necessary, the underperforming stock is good news. This indicates that future returns could push the shares significantly higher. So although the focus of the small company Voyager portfolio Amazon makes a poor fit, and those looking for broad-based exposure to AI stocks may still reasonably consider it in their portfolio.
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Don Kiplinger has positions in Amazon and Nvidia. The Motley Fool has and offers positions on Amazon and Nvidia. Motley Fool has a disclosure policy.
Amazon’s Best Days May Be Yet to Come Originally Posted by Motley Fool
