Bull of the Day: Amazon (AMZN)

Amazon (AMZN) has ripped 20% higher in the past three months to finally break out meaningfully above its 2021 highs, outpacing most of its Magnificent 7 technology peers during this stretch.AMZN stock looks ready to run as Wall Street rewards Amazon for its transition into a mature company churning out massive earnings growth. The cloud computing and e-commerce titan is spending heavily to ensure it grabs its share of the gigantic and rapidly expanding artificial intelligence pie. Amazon is even trying to compete against Nvidia in the AI chip market.Amazon stock trades at all-time highs while its valuation levels are near their lowest on record, driven by soaring earnings.Investors should consider buying this Magnificent 7 tech stock in January because Amazon looks dirt cheap and ready to take off again following an underwhelming several years based on its lofty standards.Why Amazon is a Must-Buy Stock in 2025Amazon holds nearly 40% of the total e-commerce market share in the U.S., blowing away second-place Walmart’s 7%. Amazon also runs the world’s largest cloud-computing business. AWS controls 31% of the global cloud infrastructure market at 31%, outpacing Microsoft’s (MSFT) 20% and Alphabet’s 12%.Amazon’s Prime business is expanding its reach in the streaming world to better compete against Netflix and others. On top of that, Amazon’s digital advertising segment is surging. The strength of its higher-margin AWS and ad segments and its commitment to efficiency are driving Amazon’s earnings growth.Image Source: Zacks Investment ResearchAmazon grew its revenue by roughly $200 billion ($188b) between FY20 and FY23 to pull in a mind-blowing $574.79 billion in 2023. On top of that, AMZN swung from a loss of -$0.27 a share in 2022 to +$2.90 a share in 2023, restarting its impressive bottom-line expansion of the last several years after its FY22 downturn.Amazon’s FY24 earnings outlook has climbed 50% in the last 12 months, with its FY25 outlook over 30% higher. Amazon’s EPS per share estimates have surged recently and its Most Accurate Zacks estimates came in solidly above consensus, helping AMZN land a Zacks Rank #1 (Strong Buy). The tech powerhouse has crushed our bottom line estimates by an average of 25% in the trailing four quarters.Image Source: Zacks Investment ResearchAmazon is projected to grow its earnings by 82% in 2024 and 20% in FY25 to reach $6.32 a share. The company is also expected to boost its sales by 11% in FY24 and 2025 to climb to $706.50 billion in 2025—adding $130 billion vs. FY23.AMZN is set to post four straight years of low double-digit sales growth following years of much larger expansion as it settles into its standing as a mature tech powerhouse akin to Microsoft. It is also worth stressing that the larger YoY percentage growth figures are impossible to maintain as the base number rises.Why Amazon is a Great Artificial Intelligence Stock to BuyAmazon plans to spend more than $100 billion over the next decade on data centers and other efforts to fuel its AI expansion. Amazon in November said it was investing another $4 billion in AI safety and research upstart Anthropic, doubling its investment.The additional billions Amazon is pouring into the AI company are projected to help Anthropic improve and speed up the development of its Claude AI assistant. Amazon is ramping up its plans to compete against ChatGPT and other customer-facing AI standouts.Amazon announced in December plans for what it calls an Ultracluster. The gigantic AI supercomputer will be comprised of hundreds of thousands of Amazon’s own Trainium chips. Amazon’s Trainium chips are purpose built by “AWS for AI training and inference to deliver high performance while reducing costs.”Image Source: Zacks Investment ResearchTech companies from Apple (AAPL) to Databricks are using AMZN’s newest chips. Amazon is attempting to improve and grow the influence of its in-house-designed chips to compete against Nvidia’s (NVDA) AI GPUs.According to AMZN, its “Trainium2-based Amazon EC2 Trn2 instances are purpose-built for generative AI and are the most powerful EC2 instances for training and deploying models with hundreds of billions to trillion+ parameters.” Amazon’s new generation of AI chips deliver up to “4x the performance” and have “50% lower training costs than comparable Amazon EC2 instances.”Now is a Great Time for Traders and Long-Term Investors to Buy AmazonAmazon stock has climbed around 10,000% in the last 20 years to destroy Tech’s 800%. AMZN has soared 1,400% in the past decade to blow away Apple, Meta, Microsoft, Alphabet, and Tech (344%). Yet, Amazon’s 135% climb in the last five years has AMZN neck-and-neck with Tech.Image Source: Zacks Investment ResearchAmazon is finally starting to break out, surging 20% in the trailing three months vs. Tech’s 6% climb. The recent run pushed Amazon to new all-time highs, breaking out meaningfully above its 2021 peaks for the first time after it briefly climbed above those levels back in July. Amazon is trading just below its 21-day moving average and near neutral RSI levels.  On the valuation front, Amazon trades over 90% below its highs and at over a 50% discount to its 10-year median at 35.5X forward 12-month earnings. Amazon trades at some of its cheapest forward earnings levels since the 2008 financial crisis. AMZN’s price/earnings-to-growth (PEG) ratio offers 30% value compared to Tech.Image Source: Zacks Investment ResearchAmazon’s ability to help fund a ChatGPT competitor, integrate AI into all areas of its business, and compete directly against Nvidia in the AI chip industry make AMZN one of the top long-term artificial intelligence investments. Wall Street agrees, with 46 of the 50 brokerage recommendations Zacks has for Amazon sitting at “Strong Buys.”Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Apple Inc. 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