Amazon’s strategic investments and ongoing cost optimization efforts position the tech giant well for future growth. The bull market confirmed its presence last year and has been roaring higher ever since. Investors have piled into growth stocks that may benefit from a strengthening economy, favoring companies in game-changing technologies like artificial intelligence and quantum computing.
Rising inflation previously weighed heavily on Amazon, hurting the company’s costs and limiting its customers’ buying power. However, Amazon used this opportunity to revamp its cost structure. By cutting jobs and optimizing its fulfillment network, Amazon shifted from its first annual loss in a decade to a profit just a year later, in 2023.
A major decision contributing to cost savings is the shift from a national to a regional fulfillment model in the U.S., keeping inventory closer to customers. This move has reduced Amazon’s service cost, offering lower prices and retaining customer loyalty. Amazon has fully integrated AI into both its e-commerce and cloud businesses.
In e-commerce, AI tools help design the fastest delivery routes and assist customers and sellers on the platform.
Amazon’s ai-powered growth trends
AI investments in Amazon Web Services, the company’s cloud division, have already contributed to revenue growth.
AWS has committed to becoming a force in every layer of AI, from selling various AI chips to offering fully managed services that allow customers to tailor existing language models to their needs. AI applications like the Amazon Q assistant for software developers have propelled AWS to achieve an annual revenue of $110 billion, making AI a significant growth driver for Amazon—the initial phase of AI involved building infrastructure, which continues to benefit AWS.
Simultaneously, a new growth stage is emerging, featuring real-world AI applications through AI agents—software designed to study complex problems, reason about them, find solutions, and apply them. Amazon has launched Project Amelia, an AI assistant for sellers on its platform, as an early move in this area. AWS offers various services on the quantum computing front, allowing customers to enhance their research and access specialized hardware from companies like Rigetti Computing.
As the world’s largest cloud provider, AWS’s audience is ready and eager for each new innovation. As companies increase their investments in AI and quantum computing, they are likely to turn to AWS, potentially accelerating Amazon’s revenue growth and stock price in the coming quarters. Amazon’s strategic investments and ongoing cost optimization efforts position the tech giant well for future growth, making it a compelling buy in today’s bull market.
The stock hit a new 52-week high of $235.44 in the previous session and has gained 7.1% since the start of the year.
