Amazon Stock Price Prediction: Is It a Good Deal Right Now?

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Amazon (AMZN) is one of the most dominant companies in the world. From consumer products to business services, almost everyone has interacted with an Amazon service at some point.

An investment 10 years ago would have produced multi-bagger returns – almost 10 times in the case of Amazon. But what is the current Amazon stock price prediction and will it continue its dominant streak in the future?

What is Amazon?

Although Amazon needs no introduction, here is a brief description of its core businesses and accomplishments:

  • Amazon is the world’s largest online retailer by market capitalization.
  • Amazon Prime Video is the second-largest streaming service in the world, with over 205 million subscribers.
  • Amazon Web Services is the largest cloud infrastructure in the world.

Along with this, Amazon has a foothold in several other industries through strategic acquisitions the company has made over the years. Some of the more notable companies now owned by Amazon include:

  • Whole Foods — Grocery
  • Audible — Audiobooks
  • Zappos — Clothing
  • Kiva Systems (renamed Amazon Robotics) — Deliveries
  • PillPack—Pharmaceuticals
  • Twitch — Live Entertainment Streaming
  • MGM — Content Productions
  • Alexa — Voice-activated virtual assistance
  • A9.com — Research and Advertising
  • Ring — Smart Homes

He also has a significant investment in electric vehicle maker Rivian, as well as food delivery service GrubHub.

Is Amazon buy, store or sell?

Based on 39 analyst estimates of an Amazon stock price forecast, 38 have a buy rating and one has a hold rating. The highest price prediction is $270 and the lowest is $107. The average Amazon stock price forecast is currently $176.38.

Is Amazon a good long-term investment?

Amazon shares rose sharply during the global COVID-19 pandemic, but have since lost much of their gains due to uncertain market conditions. While its last quarterly results were disappointing in terms of profitability, Amazon is showing great promise over the long term.

The Bull case for Amazon

The most powerful forces behind Amazon’s success have been its ability to operate at scale to increase revenue and profits. One of the main ways to achieve this is to constantly invest in research and development and to identify new market opportunities. Two major avenues that Amazon has targeted in recent years are digital shopping and telehealth.

Amazon Go and “Just Walk Out” are technologies developed for cashierless payments. This market is estimated at over $388 billion by 2026.

Amazon Care is a new avenue the company has explored in telehealth, another market separately estimated to be worth more than $636 billion by 2028.

It is also important to recognize the success of existing segments. AWS has grown 37% on an annualized basis over the past two years. Many big associations such as the Bundesliga in Germany, as well as companies like Boeing in the United States, signed new agreements in the latest quarterly results.

This main wing of the Amazon model now accounts for 16% of the company’s total revenue. This business segment increased its margins significantly and contributed $6.52 billion to operating profit last quarter.

The Bear Case for Amazon

Amazon doesn’t necessarily face problems because of its business model — it has ample resources, $36 billion in cash, and a diverse portfolio of investments across industries. The primary concern is macroeconomic conditions and their implications.

A decline in consumer spending and cost-cutting measures by businesses could harm overall revenue and company profitability. In addition, widespread inflation is affecting Amazon’s foreign exchange transactions.

Additionally, Amazon is under investigation by the UK Competition and Markets Authority over its use of third-party seller data. EU regulators are also watching the tech giant closely, which could result in fines if they identify antitrust issues.

Should Amazon’s Stock Rise?

Of 4,294 institutional shareholders, 2,364 increased their stake in Amazon, while 1,585 reduced their stake. According to MorningStar, Amazon stock is significantly undervalued at a 42% discount, due to its large moat, which refers to a sustainable competitive advantage.

What is the projection of Amazon inventory in 5 years?

Most analysts agree that Amazon will continue to thrive over the next five years. Amazon’s average stock price estimate by the end of 2026 is $262.39. However, due to the uncertainty in the financial markets, price forecasts for such a long period are subject to regular revisions.

Why not buy Amazon stock?

Not all of Amazon’s investments have been wise. Its recent investment in electric vehicle maker Rivian turned out to be a bad bet, as Amazon posted a loss of $7.6 billion in the first quarter of 2022 in connection with the purchase of its shares.

Ongoing inflation concerns, declining consumer confidence and falling spending may all affect Amazon’s core business. Despite AWS’s rapid growth, other segments have not performed as well.

Amazon posted a net loss in the first quarter of 2022 and one of the segments that saw declines was Amazon’s online stores. The costs of maintaining these industries have risen, and the worst may be yet to come as markets face the possibility of a recession.

Final take

Some short-term concerns could affect Amazon’s share price in the months ahead. However, the long-term outlook still represents exponential growth, and Amazon appears to be in value territory right now, experts say.

Information is accurate as of July 18, 2022.

Editorial Note: This content is not provided by Amazon. Any opinions, analyses, reviews, ratings, or recommendations expressed in this article are those of the author alone and have not been reviewed, endorsed, or otherwise endorsed by Amazon.

About the Author

David is a qualified financial adviser in the Republic of Ireland. He holds a bachelor’s degree in business and entrepreneurship, as well as more than five years of investment experience.

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