The Ultimate Growth Stock to Buy With $1,000 Right Now

Key Points

• This business has long been a leader in the e-commerce niche of the broader retail landscape.

• Digital advertising is a lesser-known segment that is growing rapidly.

• With its industry-leading cloud platform, this company is well-positioned to capture opportunities that arise from the advent of AI.

• 10 stocks we like better than Amazon ›

Investors like to buy shares in businesses that have lots of potential when it comes to increasing their revenue or earnings power. The hope is that as these companies achieve more success by gaining more customers and building their competitive advantages, the returns will follow. Of course, this strategy requires patience, as well as the ability to spot winners.

There's a potential investment opportunity that fits this criterion, and it's hiding in plain sight. Here's the ultimate growth stock to buy with $1,000 right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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Leading the e-commerce market

It's difficult for investors to find many dominant businesses like Amazon (NASDAQ: AMZN). The company has ridden the advent of the internet to disrupt various markets, most notably online shopping. According to Statista, 37.6% of all spending online in the U.S. happens on amazon.com, significantly ahead of second-place Walmart.

Amazon's marketplace has evolved dramatically over the years, expanding what shoppers can buy. These days, Amazon Autos gives customers the ability to buy or lease Hyundai vehicles. More recently, Amazon struck a deal with Hertz that will sell the rental company's used cars on the e-commerce site.

While not all retail will make its way online, there is still a lot of opportunity for Amazon as we look ahead. Data from the Federal Reserve Bank of St. Louis shows that in the U.S., just 16.3% of all retail spending is represented by e-commerce. That share should climb over time, giving this company a durable tailwind.

Flying under the radar

Online shopping gets a lot of attention when looking at Amazon. However, there are some lesser-known areas that are showing promise.

Amazon collected $15.7 billion in revenue just from digital advertising in the second quarter (ended June 30). That number was up 22% year over year. The top line will be supported by more traffic on the marketplace and more viewing on Prime Video, for instance. This is likely a high-margin segment.

With Zoox, the business is working on autonomous driving technology. The company is involved in the healthcare industry, too, with One Medical and Amazon Pharmacy.

Amazon is a powerful force, as the business has its hands in so many high-growth areas. The company seems to constantly be positioning itself to make money from all parts of the economy in some way, shape, or form. It's working, with Amazon sporting a monster market cap of over $2.4 trillion.

Cloud and AI

Perhaps the most exciting part of the Amazon empire is Amazon Web Services (AWS). Growth is still solid, with revenue increasing by 17% in the second quarter. But this is a profit machine; the operating margin was a stellar 32.9%. As AWS becomes a more important financial driver for the overall company, investors might think the stock is deserving of a higher valuation.

AWS gives the business a leading platform to develop its artificial intelligence (AI) initiatives. Yes, Amazon is leveraging this technology to personalize recommendations for shoppers on the online marketplace, to boost advertisers' targeting capabilities, or with robotics in its logistics operations.

However, as a mission-critical IT partner for its customers, AWS is Amazon's AI powerhouse. It offers a wide range of services, like Bedrock, generative AI assistant Q, and data extractor Textract, that give customers the tools needed to develop their own AI apps. Amazon is also designing and building its own chips that can power AI training and inference.

Amazon is a colossal entity. But its increasingly diversified operations provide it with multiple avenues to expand. This makes it the ultimate growth stock to buy right now with $1,000.

Should you invest $1,000 in Amazon right now?

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.