Amazon's dominance in the US e-commerce sector is unshakable, and its huge scale and strong platform effect constitute a deep moat. The company has always been committed to continuously optimizing and upgrading the platform to consolidate this competitive advantage. In the new quarter's earnings call, CEO Andy Jassy particularly emphasized Amazon's relative advantage in dealing with tariff pressure. He pointed out that most of what Amazon sells are low-priced necessities, which are less affected by tariff increases. At the same time, with its extensive cooperation with millions of sellers, Amazon can provide consumers with a wealth of choices, so that users can almost always find what they need on the platform. More importantly, in times of increased market uncertainty, consumers are often more willing to choose brands they trust, and Amazon's deep cultivation in brand building over the years is the key to winning this trust.
However, despite its multiple advantages, Amazon's stock price performance this year still underperformed the market. E-commerce and related services contribute about 68% of the company's revenue, and this business structure inevitably makes it subject to the pressure of tariff increases. However, market concerns about the direction of tariff policies are still suppressing investment sentiment and becoming the main uncertainty affecting stock prices. Therefore, the recent news of suspending tariffs on China is undoubtedly a big boon for Amazon, giving the company and the market a temporary sigh of relief. In the latest business development, Amazon's artificial intelligence business has grown rapidly, and its long-term potential is exciting.
Artificial Intelligence Business
Amazon has announced a number of new artificial intelligence plans in the past, and the company is accelerating the pace of deeply integrating AI technology into its e-commerce and logistics ecosystem. Although the market's focus on Amazon's artificial intelligence layout is mostly on AWS cloud computing and related AI products, in fact, Amazon is working to comprehensively improve its retail and supply chain operational efficiency through AI.
In the field of logistics and warehousing, Amazon has promoted a new plan in the Lab126 department to create intelligent robots that can understand natural language instructions and complete tasks autonomously. These Agentic AI robots will no longer be limited to a single task. They can handle multiple scenarios such as unloading and parts repair, thereby effectively reducing labor costs and significantly improving production efficiency.
In terms of delivery, Amazon has launched an AI platform called Wellspring, which is committed to generating more accurate maps to help drivers efficiently complete the last mile delivery. This system has been put into use in some parts of the United States, and in the future, it is planned to be combined with hardware such as smart glasses to provide drivers with hands-free real-time navigation, further reducing delivery errors and increasing the number of daily delivery orders.
In addition, Amazon's SCOT (Supply Chain Optimization Technology) platform uses AI to make more detailed predictions of inventory and demand. It can avoid seasonal inventory errors and accurately allocate the purchasing preferences of consumers in different regions, improve inventory turnover efficiency, shorten delivery cycles and reduce operating costs.
In the e-commerce business, Amazon has also increased its AI empowerment. From helping merchants create more attractive product lists to optimizing advertising strategies, artificial intelligence is creating more efficient conversion and marketing value for its platform merchants and advertisers. It is worth mentioning that Amazon's advertising business has grown into one of the world's largest digital advertising platforms and has become the company's fastest-growing business segment. The company's latest Nova Act AI agent can even help users complete web browsing, shopping and other operations, further extending the application scenarios of AI in the user experience end.
Is it time to choose Amazon now?
From 2021 to 2024, Amazon achieved a revenue growth of 36%, and it still maintained strong expansion capabilities under a high base. According to the general expectations of Wall Street analysts, Amazon is expected to achieve another revenue growth of about 31% between 2024 and 2027. Although the company's sales last year reached $638 billion, it still has considerable room for growth at such a scale, which further reflects the potential for sustainable expansion of its business model.
Is Amazon stock worth buying? Judging from the current development trend, the answer tends to be affirmative. Amazon is making every effort to increase its investment in artificial intelligence. In addition to promoting its AWS cloud computing business, it is also deeply integrating AI technology into the entire e-commerce chain, including warehouse robots, inventory forecasting optimization, and more efficient last-mile delivery. These innovations are helping Amazon significantly improve efficiency, reduce costs, and unleash greater productivity.
Artificial intelligence has become an indispensable part of Amazon's business landscape, with annual revenue of billions of dollars, and is regarded by the company as the core driver of future growth. Andy Jassy also made it clear that the rise of generative artificial intelligence has greatly improved AWS's long-term revenue prospects, which is expected to far exceed the previous $100 billion target. To this end, Amazon is making every effort to increase its investment in the field of artificial intelligence, and related investment in 2025 alone is expected to exceed $100 billion, which is larger than any other similar company. With about 30% of the global cloud computing market share and the advancement of self-developed low-cost AI chips, Amazon is actively consolidating its leading position in the field of generative AI infrastructure. Supported by the logic of long-term growth, the market generally believes that such adjustments provide more attractive buying opportunities for patient investors.
Judging from the latest financial report data, the early application of artificial intelligence has brought obvious operational benefits. Last quarter, Amazon's North American business revenue increased by 8% year-on-year, but operating profit increased by 16%, showing good operating leverage. As the AI strategy continues to advance, Amazon's profitability is expected to be further strengthened in the future.
Of course, investing in Amazon is not without risk. External factors such as macroeconomic headwinds and trade tensions may still bring fluctuations. However, the optimization of cost structure driven by artificial intelligence is an important part of its long-term growth.
AWS business is also not to be ignored. As the core source of Amazon's profits, AWS benefits from the continued expansion of the artificial intelligence wave and provides corporate customers with the ability to train models, build applications and run infrastructure. The growth potential of this track is still broad.
From a valuation perspective, although the stock price has rebounded from the low point, the current expected price-to-earnings ratio is about 35, which is still lower than Amazon's historical average. For investors who value long-term growth and AI dividends, the current price is attractive and worthy of attention and research.
