Amazon.com, Inc. (NASDAQ:AMZN) is getting attack from all angles, namely retailers, who blame the company for their woes, and the government, who are concerned about the Amazon’s influence in retail and the cloud.
But that is what should happen as dominating companies like Amazon expand and move into fresh new areas.
The only thing that could hinder the continued rise in AMZN stock is intervention by government and restrictive regulations. And that is something that could happen.
Yet unless there are extremely restrictive regulations put into place that would cap the growth of Amazon, the next decade and beyond look bullish.
Chart courtesy of StockCharts.com
AMZN stock is down 9.53% over the past month but continues to slightly outperform the Nasdaq(NYSEARCA:QQQ) this year.
Investors with a longer-term horizon should look at accumulating AMZN stock on market weakness.
How AMZN Stock Will Dominate Everything
The drivers for Amazon stock going forward will be driven by the rapidly growing “Amazon Web Services” and the company’s expansion into new areas of retail.
Amazon and Microsoft Corporation (NASDAQ:MSFT) are currently battling it out for a lucrative $10.0-billion cloud contract with the federal government.
And while $10.0 billion sounds like an enormous sum, consider that Amazon.com, Inc. reported revenues of $232.89 billion in 2018 and set to ramp this up to $331.59 billion by 2020.
The sheer scale of Amazon is what is scaring the retail sector and government, but I view it as strength as the company expands.
We know about Amazon’s move into the grocery business, which effectively hurt the grocery sector.
Now there is news Amazon and its independently run pharmacy venture, Pill Pack, is seriously looking at expanding into the online pharmacy market.
The move could be massive for Amazon stock and in reality, could help to drive competition and force drug prices lower – something the government wants.
Major drug store operators Walgreens Boots Alliance, Inc. (NASDAQ:WBA) and CVS Health Corporation (NYSE: CVS) are pushing back. You can’t blame them as both stocks are hovering at near their respective 52-week lows.
The reality is any business where there is massive scale is vulnerable to Amazon.
At first glance, AMZN stock is not cheap trading at 54.50 times its 2020 consensus EPS but extending the estimates out a few years, Amazon stock is trading at a discount to its estimated five-year compound annual growth rate for earnings.
Look ahead 10 years or less and it’s inconceivable that Amazon.com, Inc. could be valued at $2.0 trillion. That’s why Amazon stock is a potential keeper.