After increasing more than 23% so far in 2024, Amazon (NASDAQ:AMZN) stock is now up a whopping 60% over the past 12 months. However, after reaching its peak in April, the stock has stabilized. Some are suggesting AMZN stock has peaked, while others think this is simply a consolidation period before the next leg higher.
To be honest, it’s hard to tell. On the one hand, AMZN stock is expensive, trading at a price-earnings ratio of 52-times and a price-sales ratio of 4-times. On the other, this is a dominant e-commerce and cloud giant that continues to see strong growth from other tech-related businesses under its umbrella.
Let’s dive into whether now may be a good time to add to a position in Amazon, or if a more slow and steady approach is more appropriate moving forward.
Project Kuiper Prototype and AMZN Stock
Amazon is a company that’s committed to sustainability. Thus, it should be no surprise this commitment has culminated in Project Kuiper. The said project is a low Earth orbit satellite broadband network that was sparked by its Protoflight mission. Amazon has achieved a 100% success rate in validating this tech and mission procedures within the next month.
Critical tests, including safe satellite maneuvering, were successfully conducted over seven months, informing the satellite constellation and broadband network management. The final phase involves deorbiting KuiperSat-1 and KuiperSat-2 within a year, aligning with Amazon’s orbital debris mitigation plan and space safety goals.
Over the coming months, KuiperSat-1 and KuiperSat-2 will gradually descend to around 217 miles using onboard propulsion systems and natural atmospheric drag, leading to their atmospheric disintegration. Data on their movements will be shared, and collision avoidance will be actively managed to minimize risks.
Meanwhile, Amazon is scaling up satellite manufacturing, expanding global gateway stations, and constructing satellite processing facilities to ensure Project Kuiper’s readiness for delivering broadband services worldwide.
Overhauling Alexa with AI
Amazon will reportedly unveil an upgraded version of its Alexa AI assistant, leveraging conversational AI. The plan is to improve the company’s cash flow and subscription revenue metrics via this upgrade, with plans to charge a monthly subscription fee.
This move aims to offset technology costs, and won’t be included in the Prime subscription. Amazon is clearly intensifying its efforts in generative AI, aligning with growing competition from OpenAI and other major blue-chip tech stocks.
Since its launch in 2014, Amazon’s Alexa has struggled to generate consistent profitability, primarily directing users to the company’s website for purchases.
Last week, OpenAI unveiled GPT-4o, allowing real-time interaction with ChatGPT, while Google upgraded the Gemini chatbot and its search engine.
Media reports suggest Apple plans an AI overhaul for Siri. Amazon is leveraging its Titan large language model for Alexa’s upgrade amid concerns about Microsoft’s AI lead.
The Future is Bright for Amazon
Amazon has clearly focused on AI integrations in its core businesses and product lines. As the company continues to grow, and its AWS cloud presence is solidified, there’s a lot to like about this company’s fundamental path forward.
Of course, stiff competition remains, and market share will become an increasingly important factor investors will be watching. This is perhaps most true in Amazon’s cloud segment.
However, I think the company’s diverse revenue streams, its long-term growth profile and Amazon’s increasing focus on efficiency should bode well for investors long-term. This is a stock to buy and hold (not trade), at least in my view.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
