Why Amazon Is Up 25% This Year

By Douglas A. McIntyre Published May 13, 7:10AM EDT

Why Amazon Is Up 25% This Year — © 400tmax / iStock Unreleased via Getty Images

Megatech stocks have ruled the market for years. Some, however, have outpaced others, and Amazon.com Inc. (NASDAQ: AMZN | AMZN Price Prediction) is at the top of that list. So far in 2024, its price is up 25%, while the S&P 500 is 10% higher. For comparison, Microsoft Corp. (NASDAQ: MSFT), considered the AI leader, is up 10%. Alphabet Inc. (NASDAQ: GOOGL) is up 20%, but Apple Inc. (NASDAQ: AAPL) is down 9%. Nvidia Corp. (NASDAQ: NVDA) has crushed them all and is up 81%. It has jumped so much because it is considered an AI pure play.

Amazon’s AI credentials are only moderately strong. Management said AI contributed to the success of Amazon Web Services (AWS), the world’s largest cloud company, in the most recent quarter. Yet, much of what management said about AI had to do with Amazon’s future. CEO Andy Jassy commented that generative AI would contribute billions of dollars over the next several years. Investors anxious to buy companies with AI success are impatient.

Amazon still has two engines for unique earnings. While they seem old, they continue to pump out profits. Amazon remains the largest e-commerce company in the world. (There is a debate about whether China’s Alibaba is nearly as large). As brick-and-mortar retail continues to suffer and no huge competitor has emerged, Amazon could hold its e-commerce lead permanently.

Before the dawn of major AI software that companies and individuals could adopt, cloud computing was considered the key to the value of large tech companies. For example, much of Microsoft’s success lies in its Azure group of products, which made Microsoft one of the leaders in cloud computing worldwide.

AWS continues to show why cloud computing is so attractive to Wall Street. In the company’s most recently reported quarter, revenue was $25 billion, up 17% from the same period the year before. Operating profit was $9.4 billion, up 84%, and the operating margin was 38%. (See how much money Amazon makes every minute.)

Amazon’s tech may be old by AI standards, but current results have stayed extraordinary.

∴

Follow 24/7 Wall St. on Google

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.