AMZN stock looks ready to run as Wall Street rewards Amazon for its transition into a mature company churning out massive earnings growth. The cloud computing and e-commerce titan is spending heavily to ensure it grabs its share of the gigantic and rapidly expanding artificial intelligence pie. Amazon is even trying to compete against Nvidia in the AI chip market.
Amazon stock trades at all-time highs while its valuation levels are near their lowest on record, driven by soaring earnings.
Investors should consider buying this Magnificent 7 tech stock in January because Amazon looks dirt cheap and ready to take off again following an underwhelming several years based on its lofty standards.
Amazon holds nearly 40% of the total e-commerce market share in the U.S., blowing away second-place Walmart's 7%. Amazon also runs the world's largest cloud-computing business. AWS controls 31% of the global cloud infrastructure market at 31%, outpacing Microsoft's (MSFT) 20% and Alphabet's 12%.
Amazon's Prime business is expanding its reach in the streaming world to better compete against Netflix and others. On top of that, Amazon's digital advertising segment is surging. The strength of its higher-margin AWS and ad segments and its commitment to efficiency are driving Amazon's earnings growth.
Amazon grew its revenue by roughly $200 billion ($188b) between FY20 and FY23 to pull in a mind-blowing $574.79 billion in 2023.
On top of that, AMZN swung from a loss of -$0.27 a share in 2022 to +$2.90 a share in 2023, restarting its impressive bottom-line expansion of the last several years after its FY22 downturn.
Amazon's FY24 earnings outlook has climbed 50% in the last 12 months, with its FY25 outlook over 30% higher. Amazon's EPS per share estimates have surged recently and its Most Accurate Zacks estimates came in solidly above consensus, helping AMZN land a Zacks Rank #1 (Strong Buy).
The tech powerhouse has crushed our bottom line estimates by an average of 25% in the trailing four quarters.
Amazon is projected to grow its earnings by 82% in 2024 and 20% in FY25 to reach $6.32 a share. The company is also expected to boost its sales by 11% in FY24 and 2025 to climb to $706.50 billion in 2025—adding $130 billion vs. FY23.
AMZN is set to post four straight years of low double-digit sales growth following years of much larger expansion as it settles into its standing as a mature tech powerhouse akin to Microsoft. It is also worth stressing that the larger YoY percentage growth figures are impossible to maintain as the base number rises.
Amazon plans to spend more than $100 billion over the next decade on data centers and other efforts to fuel its AI expansion. Amazon in November said it was investing another $4 billion in AI safety and research upstart Anthropic, doubling its investment.
The additional billions Amazon is pouring into the AI company are projected to help Anthropic improve and speed up the development of its Claude AI assistant. Amazon is ramping up its plans to compete against ChatGPT and other customer-facing AI standouts.
Amazon announced in December plans for what it calls an Ultracluster. The gigantic AI supercomputer will be comprised of hundreds of thousands of Amazon's own Trainium chips. Amazon's Trainium chips are purpose built by "AWS for AI training and inference to deliver high performance while reducing costs."
Tech companies from Apple (AAPL) to Databricks are using AMZN's newest chips. Amazon is attempting to improve and grow the influence of its in-house-designed chips to compete against Nvidia's (NVDA) AI GPUs.
According to AMZN, its "Trainium2-based Amazon EC2 Trn2 instances are purpose-built for generative AI and are the most powerful EC2 instances for training and deploying models with hundreds of billions to trillion+ parameters." Amazon's new generation of AI chips deliver up to "4x the performance" and have "50% lower training costs than comparable Amazon EC2 instances."
Amazon stock has climbed around 10,000% in the last 20 years to destroy Tech's 800%. AMZN has soared 1,400% in the past decade to blow away Apple, Meta, Microsoft, Alphabet, and Tech (344%). Yet, Amazon's 135% climb in the last five years has AMZN neck-and-neck with Tech.
Amazon is finally starting to break out, surging 20% in the trailing three months vs. Tech's 6% climb. The recent run pushed Amazon to new all-time highs, breaking out meaningfully above its 2021 peaks for the first time after it briefly climbed above those levels back in July.
Amazon is trading just below its 21-day moving average and near neutral RSI levels.
On the valuation front, Amazon trades over 90% below its highs and at over a 50% discount to its 10-year median at 35.5X forward 12-month earnings. Amazon trades at some of its cheapest forward earnings levels since the 2008 financial crisis. AMZN's price/earnings-to-growth (PEG) ratio offers 30% value compared to Tech.
Amazon's ability to help fund a ChatGPT competitor, integrate AI into all areas of its business, and compete directly against Nvidia in the AI chip industry make AMZN one of the top long-term artificial intelligence investments.
Wall Street agrees, with 46 of the 50 brokerage recommendations Zacks has for Amazon sitting at "Strong Buys."
Ero Copper Corp. is a copper producer aiming to greatly expand its annual production to capitalize on growing demand.
ERO stock has tumbled since late September alongside its fading earnings outlook and the broader Basic Materials sector.
ERO Copper 101
Copper is an incredible conductor of electricity, making it essential in electrical wiring, power generation and transmission, electronics, telecom infrastructure, and beyond.
The energy transition and the rapid expansion of energy-intensive industries such as data centers and AI should support the copper market over the long haul.
The metal is often seen as a barometer for the global economy given its heavy use in construction and other areas.
Ero Copper is a Vancouver, B.C.-headquartered copper producer with mining operations across Brazil. Ero Copper is also a gold miner, helping it benefit from surging gold prices.
Ero Copper is coming off a solid stretch over the last several years and its growth outlook is impressive.
Ero Copper aims to significantly boost its annual copper production in 2025, fueled by a new mining operation. ERO is projected to grow its revenue by 23% in 2024 and 82% in FY25 to reach $959 million.
Ero Copper is expected to expand its earnings by 26% in FY24 and boost its bottom line by 194% in 2025 to soar from $0.87 in FY23 to $3.23 per share this year.
Unfortunately, Ero Copper's earnings outlook has faded since its Q3 release, with its FY25 consensus EPS down 13% in the past few months.
On top of that, Ero Copper's most accurate EPS estimate came in 35% below its beaten-down consensus to help it earn a Zacks Rank #5 (Strong Sell). The company also just completed a leadership shakeup as part of a succession plan was first initiated by Ero's board in January 2023.
ERO shares have dropped by 8% in the last year to match the Basic Material sector. The stock has been on a wild up-and-down run over the past several years, with ERO up 3% in the past three years compared to the S&P500's 28% climb.
Some investors might want to start calling a bottom on ERO stock. But it might be best to wait for its next earnings release before diving back into Ero Copper.
The Oil – Energy sector is known for its unpredictable swings, with stock performance often hinged on volatile market conditions. This inherent unpredictability makes stock selection a challenging and sometimes risky endeavor. However, amid the uncertainty, there are standout performers.
Let's delve into three promising names — TechnipFMC plc, Coterra Energy and Sunoco LP. These companies have demonstrated impressive EPS growth in recent years, positioning them as attractive buys at the current levels for investors seeking potential long-term gains in this dynamic industry.
TechipFMC: Amid the challenges posed by volatile energy prices in today's market, TechnipFMC has emerged as a standout.
Headquartered in the UK, TechnipFMC was established in January 2017 through the merger of Technip and FMC Technologies. The company specializes in manufacturing, supplying, and delivering fully integrated technology solutions and services tailored to the energy industry.
Zacks Rank #1 (Strong Buy) TechnipFMC's stock price has trended higher in the recent past, with its valuation also supporting more upside potential. Trading close to its 52-week high of $32.64 a share and with 15.90X forward earnings, FTI stock remains well below its historical median of 18.48X.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
TechnipFMC has dropped 19.1% in a decade but has climbed 78.6% over the last 12 months, comfortably outperforming the benchmark S&P 500 Index. FTI earnings are expected to have more than tripled for 2024 and increase another 24.6% in 2025 to $2.01 per share. As a matter of fact, 2025 could witness an attractive 235% increase from the 2019 adjusted EPS of 60 cents a share.
Coterra Energy: Another candidate for attractive EPS growth is Coterra Energy. It belongs to the Zacks Oil and Gas - Exploration & Production - U.S. industry.
It is an independent upstream operator primarily engaged in the exploration, development and production of natural gas. CTRA is currently #1 Ranked.
Trading at a little over $27 per share and 9.70X forward earnings, CTRA has a Value Score of B. The company trades 70% below its five-year high of 32.75X and is under the median of 9.88X.
Coterra Energy has more than doubled over the last five years to beat the S&P 500's increase of 101%. But the stock has just managed a meager 4.4% gain over the last six months, underperforming the benchmark during the period. In other words, Coterra Energy shares appear to be oversold at the moment, considering its strong fundamentals and valuation.
CTRA earnings are forecast to rise 80.1% in 2025 to $2.90 per share. That would be an outstanding 79% increase from the 2019 adjusted EPS of $1.62 a share.
Sunoco LP: Rounding out the list is Sunoco LP, which participates in the transportation and supply phase of the U.S. petroleum market across a number of states. It also focuses on motor fuel distribution to convenience stores, independent dealers and commercial customers.
Sunoco also carries a Zacks Rank of 1, with earnings estimates for 2025 moving up 44% over the last 60 days. Moreover, at $52.46 per share and 5.34X forward earnings, SUN trades far more conservatively compared to its 10-year high of 30.65X and the median of 11.52X.
While Sunoco stock lost 4.6% over the last year, it has climbed 52.2% in the last three years alone to crush the S&P 500's rise of 33.5%.
Sunoco's earnings are anticipated to have jumped 144.9% in 2024. What's more impressive is that this year's projected earnings of $9.66 per share are likely to see a neat 243% increase over the last five years, with 2019 EPS at $2.82 a share.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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