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Amazon Stock Price Prediction

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

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An investment 10 years ago would have produced multi-bagger returns — over 10 times in Amazon’s case. But what’s the current Amazon stock price prediction, and will it continue its dominant streak in the future?

About Amazon

Although Amazon needs no introduction, here is a quick breakdown of its core businesses and achievements:

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

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Additionally, Amazon has announced its intentions to acquire the following:

It also has a significant investment in electric vehicle manufacturer Rivian, as well as the food delivery service Grubhub.

Amazon Stock Price Forecast

According to CNN Business, based on 52 analyst estimates with an Amazon stock price prediction, 41 have a buy rating, seven have an outperform rating, three have a hold rating and one has a sell rating. The median 12-month Amazon stock price forecast is currently $172, or about 39% above current levels. The highest price forecast is $215 and the lowest is $110.

Is Amazon a Good Long-Term Investment?

Amazon stock rose sharply during the global COVID-19 pandemic but has since forfeited much of its gains due to uncertain market conditions. Even after a sharp mid-summer rally, shares are still down almost 26% in 2022. But things may be on the upswing. In the company’s most recent earnings release, on July 28, Amazon reported revenues that were above expectations and also issued a rosy forecast for the third quarter. Many analysts and investors alike believe that Amazon shows a lot of promise for the long term.

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The Bull Case for Amazon

The most powerful force behind Amazon’s success has been its ability to operate at scale to increase revenues and profit. One of the major ways it does this is by constant investment in research and development and identification of new market opportunities. Two major pathways that Amazon has targeted in recent years are the digitalization of shopping and telehealth

Amazon Go and Amazon’s Just Walk Out technology have been developed for cashier-less payments. The self-checkout system market size alone is expected to reach over $10 billion by 2030, according to Global Market Insights.

Amazon Care has been a new avenue the company has explored in telehealth, another market separately estimated to be worth more than $787 billion by 2028, according to Grand View Research. 

It’s also important to acknowledge the success of existing segments. Amazon Web Services, for example, grew another 33% year over year as of Q2 2022. Even its advertising segment grew to $8.76 billion vs. the expected $8.65 billion, as CNBC reported, which is notable in light of weak ad numbers from fellow tech companies like Snap and Meta.

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This primary wing of the Amazon model now makes up 16% of the company’s total revenue. This business segment has operating margins of 29% and contributed $5.72 billion in operating income last quarter, CNBC reported.

The Bear Case for Amazon

Amazon doesn’t necessarily face issues because of its business model — it has ample resources, over $60 billion in cash and a diversified portfolio of investments across sectors. The primary concern is macroeconomic conditions and their knock-on effects.

Less consumer spending and cost-cutting measures by businesses could harm overall revenues and profitability for the business. In addition, widespread inflation is affecting Amazon’s foreign exchange transactions.

Additionally, Amazon is being investigated by the Competition and Markets Authority in the U.K. concerning its use of third-party seller data. EU regulators are also keeping a close eye on the tech behemoth, which could result in fines if they identify antitrust issues.

Downsides To Consider Before Investing In Amazon Stock

Not all of Amazon’s investments have been wise moves. Its recent investment in EV manufacturer Rivian proved to be a poor bet, as Amazon recorded a $3.9 billion loss in Q2 2022 in relation to the purchase of its shares. This brings the total amount lost in 2022 alone by Amazon’s Rivian investment to a whopping $11.5 billion, according to CNBC.

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Ongoing inflation concerns, dampened consumer sentiment and retractions in spending all have the potential to affect Amazon’s core businesses. Despite the rapid growth of AWS, other segments haven’t performed quite as well.

Amazon reported a net loss in the first quarter of 2022, and one of the segments that saw declines was Amazon’s online stores. Costs to maintain these areas of the business have risen, and the worst may be to come, as markets come to grips with the possibility of a recession. Even though results were gangbusters in Q2 2022, a full-blown recession would likely take some of the shine off those results.

Final Take

If inflation were to continue out of control and a severe recession were to take hold in America, Amazon would likely suffer in the short term. However, with the latest inflation reading moderating, Amazon’s long-term prospects still shining and the shares currently sitting in value territory, the stock could be a good buy for those with the right investment objectives and risk tolerance.

Daria Uhlig and John Csiszar contributed to the reporting for this article.

Information is accurate as of Sept. 19, 2022.