Hello all, currently AMZN is a significant part of my portfolio because…
They are the biggest player in cloud serving. AWS (Amazon Web Services) is the backbone for many companies. Look at Netflix: it would take them 3+ years to transition out of using AWS, so they probably won’t do that. Amazon can up their charges to these companies, much like how Apple can within the App Store. And the bigger these companies get, the more money Amazon makes.
Amazon is a diversified company. When I buy an Amazon share, I am buying a technology, entertainment, and retail business. So to see it as one uniform business doesn’t make much sense.
They are investing so much into AI infrastructure that they could potentially be one of the most benefited companies from AI.
Their PE ratio instills doubt into a lot of investors; on paper it looks like an expensive company currently. However, the reason why that is, is because they underreport earnings. They reinvest so much into their business, and this expense hurts net income, thus high PE. However, they will gradually report more and more net income and the E in PE will look a lot better. Now is the time to buy, when investors are discouraged by the high PE. Just buy now and hold for 20 years.
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