Key Points
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While known to be a leader in e-commerce, this tech giant also has a strong presence in other tech-driven markets.
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Artificial intelligence is set to push further gains at this company’s dominant cloud computing segment.
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The stock’s current valuation looks reasonable given solid revenue and earnings growth.
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10 stocks we like better than Amazon ›
Owning growth stocks can be an exciting way to invest your capital. These are usually companies that are operating with tailwinds at their back. This helps them put up strong revenue and profit gains.
For investors, the possibility of scoring huge returns is certainly hard to ignore. But where can one find attractive opportunities? I believe there’s one, which is a historical winner, that’s hiding in plain sight.
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Here’s the smartest growth stock to buy with $10,000 right now.
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Much more than just an e-commerce powerhouse
With a market cap of $2.4 trillion and trailing-12-month net sales of $650 billion, there’s no chance that Amazon (NASDAQ: AMZN) flies under the radar. However, it’s a growth stock that investors must take a closer look at today. That’s because Amazon is riding the wave of multiple secular trends that are propelling it forward.
Investors know Amazon as the dominant e-commerce platform, with nearly 40% of all online shopping in the U.S. going through the amazon.com marketplace. With a massive product assortment at cheap prices, plus fast and free shipping, consumers are keen on spending on the Amazon site.
But the business is much more than an online retailer. Amazon also has a sizable digital ad segment that generated $56.2 billion in revenue in 2024. It’s growing at a double-digit clip, too. And based on the profitability of industry leaders Alphabet and Meta Platforms, Amazon is surely raking in meaningful earnings from its advertising efforts.
There’s also Amazon Web Services, the industry’s leading cloud computing platform. It has generally posted faster growth than the overall company. And with a first-quarter operating margin of 39.5%, it’s also been the profit engine. According to Grand View Research, the global cloud computing market is expected to expand at a 20% yearly pace over the next five years to $2.4 trillion.
AWS is clearly staring at a long growth runway. Amazon CEO Andy Jassy estimates that only 15% of IT spending has shifted to the cloud thus far, leaving plenty of opportunity for AWS to capture the ongoing transition. The rise of artificial intelligence helps in this regard, as enterprise customers have a growing desire to build AI apps and tools using the products and services that AWS offers.
“Before this generation of AI, we thought AWS had the chance to ultimately be a multi hundred-billion-dollar revenue run rate business. We now think it could be even larger.” Jassy said on the Q1 2025 earnings call.
Still a smart buy
With a huge revenue base, it can undoubtedly be difficult for Amazon to continue growing the top line at a respectable clip. The company operates from a position of strength, though, because weakness in one area can more than be made up for by robustness in another. Most other businesses aren’t as fortunate. This supports Amazon’s powerful competitive standing.
Wall Street consensus analyst estimates call for revenue to increase at a compound annual rate of 9.7% between 2024 and 2027. However, I wouldn’t be surprised at all to see growth come in better than this forecast. Amazon’s ability to leverage its disruptive and innovative capabilities to penetrate adjacent growth vectors is a phenomenal trait.
A renewed focus on operational efficiency has supported profitability gains in recent years. And this is set to continue. Analysts believe earnings per share will jump by 17.6% between 2024 and 2027.
The stock is reasonably valued, at a forward price-to-earnings ratio of 36.6. Given Amazon’s dominance, investors shouldn’t hesitate to buy $10,000 worth of the business, which should get you about 44 shares.
Should you invest $1,000 in Amazon right now?
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Meta Platforms. The Motley Fool has a disclosure policy.
