The Nasdaq Composite Index, which includes Amazon (NASDAQ: AMZN), has advanced by 32% year to date, driven largely by enthusiasm for artificial intelligence (AI). This momentum is promising for 2025, as historical data suggests that strength in the index often translates to more gains.
Since its creation in 1971, the Nasdaq has consistently delivered strong returns. In the past 20 years, it has returned at least 20% and in the past 12 years, it has reached a minimum gain of 30%. Historically, if the Nasdaq meets or exceeds this threshold this year, it’s likely to surge by an additional 19% next year.
Amazon is one stock where Wall Street is particularly bullish. With 94% of analysts rating the company as a “buy” and only 6% recommending selling, Amazon stands out as a trillion-dollar company with significant potential for growth. The company’s e-commerce platform is dominant in North America, and its advertising business is rapidly gaining share.
Amazon Web Services (AWS), the company’s cloud computing arm, has a 31% market share and is nearly equivalent to the combined market share of Microsoft and Google. AWS’s dominance in AI gives it a significant advantage, as companies are likely to stick with providers they know when adopting AI services.
The company has introduced several AI-powered features, including custom AI chips for training and inference, Bedrock for building generative AI applications, and Amazon Q, its natural language assistant. CEO Andy Jassy has stated that AWS’s AI business is growing at a triple-digit pace, and the company expects this momentum to continue.
Wall Street expects Amazon’s earnings to grow by 25% in the next year, which makes its current valuation of 49 times earnings seem reasonable. With a market value approaching $2.5 trillion, there’s still room for growth.
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Source: https://www.mitrade.com/insights/news/live-news/article-8-516511-20241211