5 Reasons to Buy Amazon Stock Like There's No Tomorrow

A $10,000 investment in Amazon (NASDAQ: AMZN) on the company's initial public offering in 1997 would be worth a jaw-dropping $23.4 million today. For those not prescient enough (or old enough) to buy Amazon stock then, the same $10,000 invested only 10 years ago would be worth over $74,000 now.

Amazon is no longer the scrappy start-up it was in 1997. Is this e-commerce and cloud services giant with a $2.4 trillion market cap still an attractive alternative for investors? I think so. Here are five reasons to buy Amazon stock like there's no tomorrow.

Image source: Amazon.

1. Moats galore

One of the top things that Warren Buffett likes in a stock is its economic moat. Like the physical moats around medieval castles protected the inhabitants from attacks, economic moats protect companies from competition. And Amazon has moats galore.

Perhaps the most important moat for Amazon is its scale. The company has built a massive logistics and supply chain network that is unmatched. Amazon's huge scale also enables it to offer low prices that keep customers coming back.

2. The future is in the cloud

You're reading this article courtesy of a server hosted in the cloud. Most of the activities you and millions of others do online are made possible by apps running in the cloud. There's a good chance the cloud platform belongs to Amazon Web Services (AWS). It's the largest cloud service provider in the world with a market share of around 30%.

Although cloud adoption has grown tremendously, we're still only in the early innings. Amazon CEO Andy Jassy stated last year that over 85% of global IT spending remains on-premises, with the remainder in the cloud. He predicts this will flip and give AWS a huge growth opportunity.

3. Two letters: A and I

Billionaire Bill Ackman loaded up on Amazon stock earlier this year for his Pershing Square Capital Management hedge fund. Ackman and his team wrote in Pershing Square's mid-year interim report, "Over time, we expect AI to spur greater cloud adoption."

That view is 100% correct, in my opinion. Artificial intelligence (AI) is accelerating the shift to the cloud -- and helping AWS in the process. But AI is also benefiting Amazon in other ways. For example, the company's new DeepFleet AI model coordinates movements for over 1 million robots and improves their travel efficiency by 10%. These kinds of improvements hold the potential to boost Amazon's profitability.

There's a lot on the way related to AI that should work to Amazon's advantage as well. In particular, I predict that agentic AI will provide a major tailwind for AWS in the coming years.

4. A tiny retail market share translates to a huge opportunity

Jassy reminded analysts on Amazon's 2024 second-quarter earnings call that his company has a market share of around 1% of the global retail market. He also pointed out that between 80% and 85% of retail transactions are still conducted in physical stores.

Similar to his prediction about a shift from on-premises IT to the cloud, Jassy thinks e-commerce will take away much of brick-and-mortar retailers' business over the next couple of decades. I suspect he's right. Amazon's tiny retail market share translates to a huge opportunity.

5. Jeff Bezos' famous five words

Amazon founder Jeff Bezos said years ago, "Your margin is my opportunity." Bezos' famous five words underscore another key reason to buy Amazon stock: The company is continually looking for new markets to conquer.

We won't have to wait long for the next new market for Amazon. It plans to soon launch a new satellite internet service using the Project Kuiper satellite network. Amazon won't rest on its laurels anytime soon. That's the kind of business smart investors should want a stake in.

Keith Speights has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.