Sustained dominance in the online retail sector and the growing cloud computing wing are forming a likely formidable foundation for Amazon’s (NASDAQ: AMZN) stock to outperform in the future.
After the recent general crash in tech stocks, AMZN has recovered, surging 18% from its yearly low price of $2,951 recorded on March 8th. On a year-to-date basis, the stock is up 9.5%, a build-up from the 2020 gains accelerated by the coronavirus pandemic that resulted in a major shift to eCommerce products.
The potential to dominate eCommerce and cloud computing saw AMZN earn a listing among the ‘best stock ideas’ by investment bank and financial services company Jefferies. Analysts noted that Amazon remains the go-to eCommerce platform among most U.S. citizens.
“Amazon is a clear standout, with 77% of consumers continuing to spend more on the site since restrictions were lifted,” said Jefferies analyst Brent Hill.
The company’s position in the eCommerce ecosystem offers a possibility for stock growth. Amazon has shown its intention to dominate the sector by unveiling initiatives like Amazon Prime, the company’s customer rewards program. The program will likely drive more spending on the platform.
Furthermore, as remote working culture receives massive adoption, Amazon Web Services will likely keep attracting more users as it offers infrastructural support. Notably, the cloud computing wing has remained profitable.
At the same time, Amazon is the post-pandemic winner. Our previous research observed that the Amazon marketplace has added 295,000 new sellers in 2021 as of March 21. Notably, a majority joined through the United States marketplace accounting for 26% or 76,769.
Analysts remain confident AMZN will outperform
Elsewhere, 32 Wall Street analysts are projecting Amazon stock to outperform. The consensus price target on the shares is at $4,297, with the highest bullish sentiment at 96% while the average stands at 72% for the next 12 months. Basically, according to the analysts, AMZN will not be trading lower in the next year.
The projection is based on the recent Amazon business model that offers strong growth potential. The company is also emerging from the pandemic with massive growth opportunities ranging from plans to diversify into virtual health care programs under Amazon Care and acceleration of the prescription drug business. In a period healthcare is emerging as a key part of the American economy, Amazon will potentially grow with an extension to its stock.
AMZN stock to get a boost from revenue
Amid the increasing product offering, Amazon’s revenue is in line to experience further growth.
Strong revenue has always boosted investor confidence in any stock and AMZN does not appear to struggle in this area. As of Q1 2021, the company was generating $837,350 in revenue per minute representing a growth of 44.04% from the $582,200 recorded during the same period in 2020.
Furthermore, Amazon has recorded a significant revenue per employee despite trailing rivals like eBay. For example, a recent research revealed that eBay generated $811,024 revenue per employee, nearly three times higher than Amazon’s $297,381 and Alibaba’s $285,540.
Based on these developments around Amazon, the stock presents a strong buy position for investors.