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Where is Amazon’s (AMZN) stock price heading next year? Let’s formulate a prediction by running through the key factors, including the company’s current position, primary growth drivers, potential challenges and strategic initiatives in play.
Amazon’s Current Market Position
Amazon has leading market share in two industries, e-commerce retail and cloud computing, plus a third-place share in U.S. digital advertising. Here are the numbers, according to Statista:
- In e-commerce, Amazon’s market share is 37.6%. That percentage exceeds the combined market share of three other top online retailers, Walmart, Apple and eBay.
- In global cloud computing, Amazon’s market share is 31%. Microsoft follows with 25% of the market, while Alphabet accounts for 11%.
- In U.S. digital advertising, Amazon’s share is 12.5%, behind Alphabet at 26.8% and Meta Platforms at 21.1%.
Historical Performance Of AMZN Stock
Amazon has been a strong growth story for investors since 2010. In that period, AMZN stock grew from a split-adjusted $6 to nearly $200.
The climb has not been linear, however. Shareholders benefited from a big spike in late-2020, which largely held until 2022. Like several of its tech counterparts, AMZN shed value in that year, dipping enough to walk back two years of gains.
After falling to nearly $80 in December 2022, AMZN stock made a rocky climb to eclipse $200 in July of this year. Investors have since pulled back from that peak and the stock now trades at just over $190.
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Key Drivers For Amazon’s Future Growth
Likely sources of growth for Amazon going forward include AWS, which will benefit from the AI boom, e-commerce sales and the rollout of advertising on Prime Video.
Cost-Efficient AI Computing
Amazon is working to establish AWS as the first platform of choice for AI computing. That initiative involves offering customers a range of hardware and software choices at different price points. To do that, Amazon developed its own AI training and inference chips, called Trainium and Inferentia, respectively. The first generation of the in-house chips has been well-received, and Amazon expects to release updated versions later this year.
As well, the company continues to enhance its software stack for AI developers. That stack includes machine-learning platforms Amazon SageMaker and Amazon Bedrock plus the generative AI coding assistant Amazon Q, among other things.
Retail Revenue Growth
On the retail side, Amazon has been working to improve delivery speed, keep prices low and expand product selection. These initiatives are gaining traction, with more customers turning to Amazon for essential goods, such as deodorant and toilet paper. This category is important because customers buy these items repeatedly.
Going forward, the company is focused on reducing costs across its fulfillment network through automation and AI. Lower fulfillment costs support the three customer-oriented outcomes—faster delivery, lower costs and broader selection—that can fuel sales growth.
Ads On Prime Video
Amazon started showing ads on Prime Video content earlier this year. The change could be an ongoing source of advertising and subscription revenue growth.
The company says its ad technology can link Prime Video ad spending to sales and other outcomes, which has historically been challenging for TV advertisers. The same measurement technology can also reveal opportunities to optimize ad content for better performance.
Prime subscribers can upgrade to an ad-free experience for $2.99 monthly.
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Current And Future Challenges And Risks
Risks to watch for Amazon include rising competition in retail and cloud computing, plus a pending antitrust lawsuit filed by the Federal Trade Commission (FTC).
Rising Retail Competition
Amazon was the first to offer free shipping with a subscription, but others have followed suit. The closest Prime competitor currently is Walmart+. This program includes free shipping and delivery from Walmart stores, plus discounts on gas, entertainment and fast food. The annual price of $98 undercuts Prime’s yearly rate of $139.
Target also launched a paid membership product this year, called Target Circle 360. Members primarily get free two-day shipping.
There are additionally many other discount online retailers that compete with Amazon, either comprehensively or in specific categories. Examples include eBay, Temu and Flipkart plus Newegg for electronics and Shein for clothes.
Rising Cloud Competition
Amazon holds the top spot in cloud computing now, but Microsoft has been moving closer. The AI boom is a strong motivation to close the gap.
Building out the best cloud offering for AI computing will require continued investments in infrastructure and innovation. All three of the top providers—Amazon, Microsoft and Alphabet—have deep pockets, which sets the stage for an ongoing competitive battle.
Antitrust Lawsuit
In September 2023, the Federal Trade Commission and 17 state attorneys general sued Amazon for illegal, anti-competitive actions in its e-commerce business. Amazon has publicly defended its practices as being in the customer’s best interest.
The case could ultimately force Amazon to change its business practices or restructure. Fortunately, any damaging outcomes are likely years away, which means the process is more of a concern today than the result. If the case drags on for years, it could become an expensive distraction for Amazon.
Amazon’s Strategic Initiatives For 2025
According to Amazon’s second quarter 2024 earnings call, strategic priorities for next year include:
- Expanding Amazon Q capabilities
- Increasing the value proposition of advertising on Prime Video by improving measurement
- Reducing fulfillment costs via automation and process innovation
- Leveraging AI to create better shopping experiences and further streamline fulfillment
- Building out and monetizing Project Kuiper satellite broadband network
Analyst Predictions For Amazon Stock By 2025
Analyst predictions for Amazon characterize it as one of the best stocks to buy right now. Across 41 covering analysts, 24 rate AMZN stock a strong buy. The remaining 17 are buy ratings. There are no hold, sell or strong sell ratings.
The stock currently trades at about $193 per share. Analyst price targets range from $145 to $265, with a consensus of $220.59. The midpoint represents upside of about 14%.
In terms of financial results, analysts expect nearly 13% revenue growth and 66% EPS growth this year. The outlook for 2025 is about 11% revenue growth and 23% EPS growth.
Investor And Market Sentiment
Amazon stock has bounced back from a tough 2022, notching roughly 60% growth over the past two years. Investors have been largely positive on AMZN in 2024, except for a dip after a disappointing jobs report in early August. The S&P 500, Amazon’s tech peers and many of the best ETFs followed similar trajectories.
The current stock price is about 4% below AMZN’s July high point of $201.20.
Where Is Amazon Stock’s Price Heading In 2025?
Amazon has momentum in AWS and retail sales, which collectively provide much of its revenue and operating income. Assuming the Fed continues to lower interest rates and the U.S. economy responds well to those changes, AMZN stock could see a double-digit lift in 2025.
Additionally, several of Amazon’s valuation metrics are below their five-year averages, which provides an extra margin of safety. The company’s P/E ratio, for example, is 46.27. That compares favorably to the five-year average P/E of 75.63.
Bottom Line
Amazon has a pesky lawsuit in play and potentially stiff competition for cloud computing and retail sales. Even so, the tech giant has business momentum that could drive double-digit appreciation over the next 12 months. Add in reasonable valuation ratios and it’s easy to argue that now may be the time to add Amazon to your portfolio.
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