Amazon Stock Predictions for the Coming Year

Predicting stock prices a year in advance is no easy task, as it requires foresight that no one possesses. However, some stocks have been established long enough and operate consistently enough that educated guesses can be made about their future performance. For instance, many investors might have anticipated that Amazon (AMZN) would hold its ground over the past year.

While the specifics of Amazon's stock price next year are uncertain, one aspect is clear: Amazon possesses a significant growth potential, and its stock tends to perform well in the long run. So, let’s examine some key factors influencing Amazon’s performance and potential over the next year.

1. Enhancements in E-commerce

Amazon’s primary business remains e-commerce, which continues to drive a large portion of its revenue. In the fourth quarter of 2024, online store sales and sales through third-party sellers made up 65% of total revenue. This indicates that e-commerce is integral to Amazon’s operations. The company consistently updates and improves its platform, adding more products and speeding up delivery. Notably, they expanded same-day delivery services by 60% in 2024, reaching 140 metro areas in the U.S.

Alongside this, Amazon is optimizing its fulfillment network, which has positively impacted its operating income. By improving its inbound distribution channels, Amazon increases the speed at which it can deliver goods to customers across the country. Last year, I believed that Amazon would enhance its product offerings, delivery efficiency, and possibly increase its market share. The first two objectives have been met thus far; however, market share remains subject to interpretation. While Amazon claims to control about 40% of the e-commerce market, ongoing efforts suggest there is room for growth. The number of Amazon Prime members is expected to continue its rise.

2. Advancements in Artificial Intelligence and Cloud Services

Another area creating excitement for Amazon investors is its focus on generative AI, primarily through the Amazon Web Services (AWS) cloud platform. CEO Andy Jassy often emphasizes the vast opportunities presented by AI and how Amazon is poised to take advantage of the shift to cloud computing, where clients can utilize an array of AI tools. As a leader in cloud services, Amazon plans to invest over $100 billion in AI this year.

Under Jassy’s leadership, the vision for Amazon includes integrating AI into every new application and program, similar to how storage and databases function today. His strategy includes leveraging partnerships, such as with Nvidia, while also developing in-house chips designed to manage AI functions effectively and economically. In the latest quarter, AWS experienced a robust 19% year-over-year sales growth, reaffirming its position as Amazon’s fastest-growing segment.

It is essential to note that Jassy has indicated the growth rate may vary in the coming years, which could affect investor sentiment as quarterly performance becomes inconsistent.

3. New Ventures and Business Interests

In the past year, I had anticipated Amazon might explore new business ventures, but it appears the company has focused on enhancing its current operations, particularly in AI. Advertising remains a rising business segment, although it has shifted to become second in growth behind AWS, recording an 18% year-over-year increase in the fourth quarter. This segment has achieved a $69 billion run rate, a significant rise from $29 billion four years ago, and its new Prime video ad-supported service is making strides.

As Amazon dives deeper into generative AI, it seems likely that the company will continue investing in its current initiatives rather than pursuing entirely new ventures at this point. Expect to see ongoing updates and expansions in its existing businesses in the months ahead.

Note: The author has no stake in the stocks mentioned and remains neutral in this analysis.

Amazon, Stock, Growth