To The Moon

Current Context

My recent investment in Amazon $Amazon.com(AMZN)$   on August 30, 2024, comes at a time when the stock has been uncharacteristically underperforming. Since early July, Amazon's share price has declined by over 10% from its record high, a slump exacerbated by the broader market's historical weakness in September. Contributing to this downward pressure was Amazon's Q2 revenue miss; while sales grew 10% year-over-year to $148 billion, they fell short of analysts' expectations of $148.7 billion. This shortfall led to understandable investor concern, further driving the stock down.

Long-Term Perspective

Despite the near-term volatility, it's essential to zoom out and recognize Amazon's enduring strengths. The company remains a dominant force in e-commerce, commanding approximately 40% of the U.S. market—far outpacing its nearest competitor, Walmart. Amazon's brand is nearly synonymous with online shopping, which positions it uniquely to capture continued growth in the e-commerce sector. Internationally, Amazon's growth story remains compelling, with last quarter's international e-commerce revenue climbing nearly 7%.

Beyond e-commerce, Amazon Web Services (AWS) continues to be a powerhouse. AWS saw a 19% year-over-year revenue increase and a staggering 74% surge in operating income in Q2 2024. The cloud computing sector is projected to grow at an annualized rate of over 16% through 2029, according to Mordor Intelligence, and AWS is well-positioned to capitalize on this expansion.

Investment Justification

The recent pullback in Amazon's share price appears to be driven more by external market factors and profit-taking rather than any fundamental weakness in the company's business model. This presents a potential buying opportunity, especially for long-term investors who can weather short-term volatility. Amazon's core businesses—e-commerce and cloud computing—remain robust growth engines with significant market share and potential for further expansion.

By investing in Amazon now, I am positioning myself to benefit from the company's continued dominance and growth in these key sectors, particularly once market conditions stabilize and investor confidence returns. While the road ahead may be bumpy, Amazon's long-term growth prospects remain compelling, making this a strategic addition to my portfolio.

$Amazon.com(AMZN)$