Amazon.com Inc. (AMZN) is one of the most important companies on Earth. It’s the world’s leading online retail outlet. And recently became a major provider of cloud computing services to businesses and consumers. As a result, AMZN has experienced extraordinary growth over the past few years. And it looks as though this trend will continue for many years to come. But the company’s growth isn’t likely to drop off anytime soon. It may rival the growth rates of its closest competitors as soon as next year. It had a total market capitalization of around $305.7 billion as of Wednesday, and analysts expect it to hit $440 billion in 2018 and then continue growing at an average annual rate of 20% for many years to come.
This means that Amazon is already larger than companies such as Wal-Mart Stores Inc (WMT) and McDonald’s Corp (MCD). This has led some analysts to wonder if AMZN will eventually be bigger than Apple Inc. (AAPL). They also wonder if it will ever challenge the market capitalization of Alphabet Inc (GOOG) and/or Microsoft Corp (MSFT).
What Is Amazon?
AMZN is a retail giant primarily known as a facilitator of online purchases. It was founded in 1995 by Jeff Bezos and has since grown into one of the world’s leading online retailers. The company sells everything from books and electronics to clothing and bulk food items. Amazon also has a streaming video service, an e-book store, and an Android marketplace called Amazon Appstore for Android.
Amazon doesn’t own or operate any of the products it sells, but instead serves as a supplier for third-party sellers and uses its vast computing power to sell these goods on behalf of customers. The company also makes money by offering advertising services to companies that use its websites or mobile apps. AMZN is an incredibly fast-growing company. It’s one of the fastest-growing companies ever. The firm has grown its revenue at an annualized rate of 29.3% over the past three years, and it has managed to consistently grow its profits at a faster rate than its sales.
Is Amazon a Good Long-Term Investment?
Looking at AMZN’s earnings growth, it’s easy to see why so many investors are excited about the company’s future. It has managed to do something that almost no other company in history has ever done; it has grown its sales faster than its earnings for more than eight consecutive years. In the long run, this kind of growth is unsustainable because it will eventually eat into margins. But investors seem to be comforted by the fact that AMZN has managed to generate an operating margin of 3.3% over the past year despite these high sales growth rates. It has also managed to generate a free cash flow of $7.8 billion in 2015, and this trend is expected to continue for many years.
Is Amazon a Buy, Hold, or Sell?
Amazon is not a bad long-term investment, but it’s not as good an investment idea as many investors believe. Short-term growth will continue for many years, but the company’s future depends on its ability to maintain this growth over the long run. And that’s difficult to do. The reason why Amazon can consistently grow its sales faster than its earnings isn’t that it currently offers a better product or service than its competitors; it’s simply because it was the first e-tailer in the market and has a reputation for low prices and fast shipping. AMZN does use first-mover advantages and technology to sell goods more efficiently than competitors, but this advantage won’t last forever.
Is Amazon Stock Expected to Rise?
The company’s growth is expected to continue for many years and will eventually slow down. The firm’s share price has increased by $55.65 per share in the past year, but it could have been even higher if not for the recent negative news surrounding its China operations. And this growth is expected to continue. So, investors expecting a high yield should expect steady increases in their investment returns over the long term. But this doesn’t mean that AMZN is a bad stock to own or hold because Amazon can continue growing at a fast pace for many years to come and will still be able to generate a solid return on shareholders’ investments.
