outline
We are going through an unexpectedly difficult time with volatility at the level of a financial crisis. Numerous diagnoses and predictions are being made, but it is not helpful to respond with hasty predictions as it is an issue that has worsened stock market sentiment rather than directly affecting the intrinsic value of stocks.
If you still own the stock, Amazon maintains a strong position in the global e-commerce and cloud markets as of 2025. Although the stock price has fallen since the announcement of the fourth quarter of 2024 results, it offers an attractive investment opportunity based on long-term growth potential and strong profitability. Considering the continued growth of AWS (Amazon Web Services), cost reduction strategy through artificial intelligence (AI) and in-house semiconductor development, logistics optimization, and expansion of advertising business, it is highly likely that Amazon's growth will be maintained for the next few years.
Reasons for recent stock price fluctuations
Amazon's stock price has continued to decline like other stocks since hitting an all-time high in early February 2025. The reasons for this stock price decline are as follows.
- High expectations, mediocre performance
- Although sales growth in the fourth quarter was solid at 10.5%, it did not meet expectations.
- The growth rate of AWS, a major business unit, was also maintained at 18.9% due to supply chain issues and power limitations.
- Increasing geopolitical risk
- Increasing concerns about a tariff war → Reflecting concerns that it could lead to increased product prices and a slowdown in consumer demand
- Consumer sentiment is weakening due to slowing growth of the U.S. economy and falling consumer confidence index.
Therefore, it can be said that although performance was solid, concerns about external factors were muted.
Amazon 4th quarter 2024 performance summary
Sales summary
As mentioned earlier, Amazon continued to grow steadily in the fourth quarter of 2024. In particular, increased sales in North American and international markets and the continued growth of AWS served as major growth factors.
Item2024 4th quarter performanceYear-on-year growth rateTotal sales$187.8B+10.5%North American sales$115.6B+9.5%International sales$43.4B+7.9%AWS sales$28.8B+18.9%Net profit$1.86 per share+86%Net profit margin 10.7%+4.4%p
AWS continues to be a key growth driver for Amazon, and continued growth is expected after 2025 due to increased demand for AI and cloud computing.
Profitability Summary
Amazon's profitability continues to improve, and by 2024, the operating profit margin of each business division has significantly improved. In particular, the profitability of the AWS division played an important role in improving overall profitability.
SectorOperating profit margin in 2024North America (online shopping)6.4%International (online shopping)2.7%AWS37.0%Overall operating profit margin10.8%
Due to AWS' high margin structure, as AWS sales increase, Amazon's overall profitability increases. In addition, as cost reductions continue through logistics optimization, automation, and introduction of artificial intelligence (AI), profit margins in the online shopping sector can also be expected to improve.
Amazon's Operating Cash Flow increased to $115.9B, proving that the company has strong cash generation capabilities.
What is the next generation of food?
Amazon will continue to invest actively in research and development (R&D) in 2025 and is focusing on strengthening its future competitiveness.
- In-house semiconductor development
- AWS is developing its own chips (Graviton, Trainium, Inferentia) to reduce dependence on Nvidia and reduce costs and improve performance.
- Already from 2022, The situation in which a product using its own chip was launched and Also introduced in Claude
- Quantum Computing
- Quantum computing chips are also in the process of being internalized, mentioning the possibility of advancing the development schedule of “Ocelot” by 5 years.
- Investment in AI and cloud infrastructure
- Investment for research and development and infrastructure construction is expected to reach $100B in 2025, most of which will be used to expand AI and cloud infrastructure.
Amazon's AWS and online shopping business have a business structure that can directly benefit from AI advancements, and are accelerating the strengthening of AI SW capabilities as well as the internalization of HW, and are already showing results.
Stock level
Due to the recent plunge, Amazon's stock price is currently undervalued compared to the historical average.
As the recent decline was concentrated in American companies, a comparison with Alibaba, a Chinese company with an almost identical business model, is as follows.
IndicatorsAMZNBABAP/E GAAP (TTM)35.9720.31EV/Sales (TTM)3.392.21EV/EBITDA (TTM)17.9511.38Sales Growth (Forecast)10.31%6.24%3-Year Sales Growth (CAGR)10.74%5.49%Diluted EPS Growth (Forecast)37.87%9.71%Diluted EPS 3-year growth rate (CAGR)19.51%22.88%Total profit margin48.85%38.81%ROE24.29%10.27%
The valuation, which had shown a drastic difference of more than three times, has eased considerably. Rather, considering growth rate and profitability, Amazon's stock price is judged to be relatively more attractive.
conclusion
Amazon is the company that can best benefit from recent hot topics such as AI, cloud, semiconductors, and logistics automation. I do not want to recommend investing in the current period of high uncertainty, but if you miss the stop-loss timing and are still holding, there seems to be no reason to take losses and stop losses.