Stock market trends are never constant, and with Amazon’s stock price trends in recent years, you may be wondering if you should buy, sell, or hold Amazon in 2025.
Amazon’s stock price has significantly increased by 38% over the last three years. This is a general trend as the increase is about the same as the overall stock market (the S&P 500). Many investors want to beat the market. They want to make more money than the average market growth. Achieving this long-term goal makes it normal to wonder if buying or keeping Amazon stock is a good idea right now.
There are some good reasons why keeping your Amazon stock or buying more could still be a smart move. This article includes three reasons why buying or holding onto Amazon stock in 2025 might be a good strategy.
AI Cloud Computing Services
Amazon recently shared its financial results for the fourth quarter, and some investors were unhappy with them. They expected Amazon Web Services (AWS) to make Wall Street’s consensus estimate of $28.84 billion, if not more. However, AWS slightly missed this estimate.
It made a revenue of $28.79 billion. Even though it was a slight miss, AWS still made 19% more money than it did during the same time last year. The segment also accounted for half of Amazon’s total operating income.
Investors who reacted negatively may have focused too much on the small miss and overlooked the bigger picture with Amazon and its cloud opportunities. AWS is still the top cloud computing service provider. It holds 31% of the market share. It remains ahead of its biggest competitor, Microsoft, which has 20% of the market. This shows that Amazon and its cloud computing service still have strong potential and a leading position in the growing cloud industry.
Amazon is in a great spot to make a lot of money. This is because more people and businesses need cloud computing for artificial intelligence (AI).
Companies compete to offer the best AI services, and Amazon is presently on top. Experts at Goldman Sachs think that by 2030, the money made from AI cloud services could hit $2 trillion worldwide. Since Amazon is already the top cloud computing company, it could benefit from this growing demand for AI cloud services.
ALSO READ: Amazon to Invest $100 Billion in 2025 to Seize a ‘Once-in-a-Lifetime’ AI Opportunity
E-Commerce
In terms of e-commerce, Amazon still dominates. It is still the biggest name in online shopping. Even though other stores have tried to up their game and get better at selling things online, they are still far behind Amazon. The company controls about 40% of the U.S. e-commerce. On the other hand, Walmart, its biggest competitor, only has around 7%.
Even though it is at the top of the e-commerce industry, Amazon still keeps improving its website and delivery system. The company is still making an effort to give shoppers a good experience. In late 2024, Amazon delivered over 65% more packages to its Prime members on the same day they ordered or the next day compared to the previous year. The company also had its best-ever sales during its Black Friday week and Cyber Monday event last year.
Because of all this, Amazon’s sales in North America went up by 10% in the last few months of 2024. Sales got as high as $115.6 billion. The company’s profit from this part of its business also increased by 43%, bringing in $9.3 billion.
Last year, online shopping accounted for about 16% of all the things people bought in stores and online in the U.S. According to eMarketer, it will still grow to 20% by 2028. Since Amazon is a big player in the online shopping industry, this growth means the company could make even more money.
Amazon’s Advertising Business
Amazon’s advertising business is growing fast. In the last three months of 2024, the company made $17.3 billion from ad sales, which is 18% more than before. Back in 2019, the company made $12.6 billion from ads. This shows how much it has grown.
According to estimates from Statista, Amazon will take about 15% of all digital ad sales this year. This makes it a bigger competitor to other companies that make money from online ads. In 2024, Amazon made over $56 billion from ads; management expects that to rise to $69 billion a year soon.
Even though ads are not the biggest part of Amazon’s business, they are still a strong way for the company to keep growing in new areas.
ALSO READ: How To Make Passive Income on Amazon
Should You Sell, Buy, or Hold?
Right now, there isn’t a strong reason to sell Amazon stock. Sure, you might have good reasons to sell any stock, maybe you need money to buy a house or pay for college, but it might be better not to sell.
Amazon is still doing well with its main businesses, like online shopping and cloud services. It is also growing in smaller areas, like advertising. Since Amazon is a leader in its field, keeping or buying its stock seems like a smart move.
Amazon’s stock is not cheap. Its forward price-to-earnings ratio is 32.3, while the average for big companies in the S&P 500 index is 23.8. However, it is still well-priced if you consider the company’s long-term growth potential.
However, before you decide to invest in Amazon, there is something you should consider. The Motley Fool Stock Advisor recently shared its top 10 stock picks, and Amazon was not on the list. The stocks they picked could bring big returns in the coming years. For example, in 2005, they recommended buying Nvidia. If you had invested $1,000 back then, your investment could be worth $765,576 today.