The Most Compelling Reason to Buy Amazon Stock Right Now

Keith Speights, The Motley Fool

Tue, Apr 29, 2025, 4:45 AM 5 min read

$19.3 million. That's how much money you'd have today if you bought $10,000 worth of Amazon (NASDAQ: AMZN) shares at its IPO in 1997 and never sold.

Could you make a 1,930-fold gain over the next few decades by investing in Amazon? Probably not. However, I think the stock will remain a big winner. And there's one most compelling reason to buy Amazon stock right now.

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Don't get me wrong: I'm not saying there's only one reason to invest in Amazon now. I can think of quite a few good reasons to buy the stock.

For one thing, Amazon is more attractively valued than it's been in quite a while. The stock has fallen over 20% below its previous peak earlier this year. Anytime Amazon has declined by this level or more in the past it presented a fantastic buying opportunity.

Sure, the company's price-to-earnings ratio of 34 might seem high. However, the earnings multiple is the lowest it's been since the market meltdown in 2008, when investors were arguably as afraid as they'd been post-World War II.

Another reason to buy Amazon is that its profitability is increasing rapidly. Management is laser-focused on the bottom line -- and it shows. The company's earnings skyrocketed nearly 89% year over year in the fourth quarter of 2024.

I view Amazon's entrance into new markets as a great reason to invest in the company, too. It's already making waves in healthcare with Amazon Pharmacy and the acquisition of primary care provider One Medical. Amazon will soon launch its Project Kuiper satellites that provide internet access across the world. I like the prospects for its Zoox self-driving car unit as well.

As good as those reasons for buying Amazon stock are, though, none present the most compelling reason to invest in Amazon. The single most compelling reason to invest in Amazon right now, in my opinion, is the company's dominant and expanding position in three interconnecting high-growth markets: e-commerce, cloud services, and artificial intelligence (AI).

Amazon is clearly the 800-pound gorilla in e-commerce and has been for years. You might not think the company has much room to grow in this space. CEO Andy Jassy would strongly disagree. In Amazon's October 2024 earnings call, Jassy noted that Amazon only has roughly a 1% share of the global retail market. He believes that much of the 80% to 85% of retail still in brick-and-mortar stores will shift to e-commerce over the next 10 to 20 years. This shift will create plenty of winners, with Amazon in the driver's seat.