Is Amazon Stock a Sell With the Decreasing Expansion?

Amazon Stock

Slower Amazon stock (NASDAQ:AMZN) growth and a bleak prognosis alarmed investors. Amazon (NASDAQ:AMZN) has been striving to expand its e-commerce company for years, lavishly investing in its logistics network and delivery capabilities. 

Even if such projects were unsuccessful, Amazon could always rely on its market-leading cloud computing company, Amazon Web Services (AWS).

Amazon Stock: Mostly Cloudy

As the adage goes, the devil is in the details, yet the specifics provided little comfort to investors. Amazon’s North American e-commerce revenue increased by 20%, while overseas sales decreased by 5%. When these two figures are added together, the company’s digital retail increased by almost 13% while incurring an operational loss.

Also, this was not just AWS’s slowest growth on record but it was also slower than its two main rivals. For the quarter ending September 30, Alphabet’s Google Cloud climbed 38% year on year, while Microsoft’s Azure gained 35%, although at a slower pace. While this isn’t an apples-to-apples comparison, it does demonstrate the heated rivalry among the main cloud providers, putting Amazon – the market leader – in the sights.

The forecast was perhaps the most worrying component of Amazon’s financial report. Amazon anticipates net sales in the $140 billion to $148 billion range for the current – and crucial – Christmas quarter, representing a 2% to 8% increase. The business also expects operational profits to range between $0 and $4 billion.

What Happens Next?

When things seem to be at their worst, it’s important to stand back and look at the larger picture since the long-term truth might be masked by the short-term turmoil.

It’s vital to remember that the economy is in a slump, with both consumers and companies cutting down on spending. Whether a recession occurs or not, investors should adjust their expectations to some extent, knowing well well that things will be quite different once the economy recovers.

E-commerce and cloud computing may seem to be stagnant right now, but growth will continue. As the industry leader, Amazon (NASDAQ:AMZN) is well-positioned to thrive when it does. According to Morgan Stanley, the global e-commerce business will increase from $3.3 trillion now to $5.4 trillion in 2026, accounting for 27% of all retail sales.

Similarly, cloud computing is predicted to rapidly increase, from $380 billion in 2021 to $1.6 trillion by 2030. Both are fruitful grounds for Amazon to plow.

In the long run, Amazon offers advantages that competitors cannot match. According to Statista, Amazon dominates approximately 38% of US e-commerce, considerably outpacing its top 14 rivals combined. In comparison, second-place Walmart accounted for 6.3%.

Furthermore, Amazon’s dominance in online selling has propelled it beyond Walmart as the top retailer in the United States. In 2021, it increased its share to 9.4%, compared to Walmart’s 8.6%.

The death of Amazon has been widely overstated. AMZN stock (NASDAQ:AMZN) is a good investment for those with patience and a strong tolerance for volatility.

Featured Image-  Pexels @ Anete Lusina

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About the author: Okoro Chinedu is a freelance writer specializing in health and finance, with a keen interest in cryptocurrency and blockchain technology. He has worked in content creation and digital journalism. Since 2019, he has written on various online platforms, and his work has been recognized by several important media sources and specialists in finance and crypto. In addition to writing, Chinedu enjoys reading, playing football, posing as a medical student, and traveling.