We came across a bullish thesis on Amazon.com, Inc. (AMZN) on Substack by LongYield. In this article, we will summarize the bulls’ thesis on AMZN. Amazon.com, Inc. (AMZN)’s share was trading at $188.71 as of May 7th. AMZN’s trailing and forward P/E were 30.73 and 29.07 respectively according to Yahoo Finance.
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Amazon’s Q1 2025 results highlight solid growth across its diverse business segments, with net sales reaching $155.7 billion, up 9% year-over-year, and operating income rising to $18.4 billion. This performance was driven by growth in its North American and international businesses, which posted 8% and 5% increases in sales, respectively. The standout segment was Amazon Web Services (AWS), which saw a 17% year-over-year increase in sales, contributing $29.3 billion in revenue. AWS’s operating income reached $11.5 billion, a 22% increase from the previous year, reflecting the ongoing strength of cloud and AI-driven services.
Despite the robust results, Amazon faced challenges in the form of tariff-related concerns, which impacted its margins in Q1. The company managed to mitigate these risks by pulling shipments forward to avoid higher import taxes, which led to one-time costs. However, demand for Amazon’s products remained unaffected by tariffs, with the company noting that customers even increased purchases in anticipation of potential price hikes. To protect against future tariff impacts, Amazon has diversified its supply chain and encouraged third-party sellers to stock up, ensuring product availability and competitive prices. The company’s global marketplace, with over 2 million sellers, offers a buffer, as many will absorb higher costs to maintain market share.
Looking ahead, Amazon has provided a cautious yet optimistic outlook for Q2 2025, projecting net sales between $159–164 billion, reflecting a 7–11% growth. This guidance accounts for potential macroeconomic uncertainties, such as trade and consumer demand fluctuations. Despite these challenges, early trends for Q2, including strong April sales and advertising growth, are promising. AWS remains a significant growth engine for Amazon, with its generative AI workloads now a multibillion-dollar annual run rate. The company is investing heavily in cloud infrastructure to support this demand, with Q1 capital expenditures of $24.3 billion focused on new data centers, servers, and AI-specific hardware.
Overall, Amazon’s Q1 results reflect resilience in both its retail and cloud businesses. While tariff concerns could add some uncertainty, Amazon’s strategic initiatives to mitigate these risks, combined with AWS’s continued growth, position the company well for long-term success. Investors will be closely watching how macroeconomic factors unfold and how quickly Amazon can scale its cloud capacity to meet the surging demand for AI-driven services.
Amazon.com, Inc. (AMZN) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 339 hedge fund portfolios held AMZN at the end of the fourth quarter which was 286 in the previous quarter. While we acknowledge the risk and potential of AMZN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
